Considerations - Parcel w/ Duplex + 3 Unit Commercial
Morning All,
I have found parcel for sale which has a nice brick duplex and a bonus three unit small commercial building. I'm pretty confident in evaluating the duplex and the purchase price I want to offer but I'm less confident on what considerations I should take into account for the small commercial building.
The property is in a small town so looking at CAP rates and all that is probably not going to lead me very far. The owner is also older so trying to get good accounting from him to figure out the NOI of the building over time is also probably not too helpful.
I have an idea of the rents and all thee units are presently occupied. I can work my way back with a 50% expense rule but I'm not sure this applies here as it does in residential. I do not yet have copies of the leases to know if the are NNN leases.
Also, if there is a vacancy, it will probably take quite a while to fill as this town is stable but not hyperdynamic economically.
What considerations would you suggest I take into account or things I should look into before going further with offering on this deal?