Thoughts on analysis of a residential w/ commercial building?
Hey everyone, I'm fairly new to real estate investing & have been researching lately trying to understand & analyze properties better & I stumbled upon this unique listing that caught my attention in CA:
Commercial Building Storefront (retail building) + Opposite Side of the lot is a residential property 3 bdrms + 1 bath Year Built 1951 Price $219,000 est cap rate 10%
-Total Lot Size 6,000 sq ft /Building sq ft 2,262 +/- Commercial Building 1,162 sq ft +/- /Residential 1,100 sq ft +/-
* Lot stretches between two parallel streets, both properties are back to back (but not attached to each other) each facing a different street
(Commercial Building)-has a showroom, back office, storage & bathroom complete w/shower. Central heat/cool, and currently gets $850 per month base rent, NNN lease where tenant pays (reimbursement) for property taxes and insurance.
Lease Term: 10/1/17 – 9/30/2020
Base Rent: $850/month
NNN Tenant Reimbursement to Landlord: $170/month
Landlord Annual Expenses: $1,020 water/sewer/garbage, $1036 property taxes, $506
annual property insurance.
Gross Annual Income: $12,240
Annual Expenses: $2,562
Net Annual Income: $9,678
Zoning CMS Building Class B
(Residential 3/1 Home)-
Lease Term: Month to Month
Rent: $1,100/month
Gross Annual: $13,200
Net Annual Income: $13,200
Combined GROSS ANNUAL INCOME: $25,440
Combined ANNUAL EXPENSES: $2,562
Combined NET ANNUAL INCOME: $22,878
I have not looked at the property, based on pictures looks in good condition & would probably need an inspection report to see if there is anything major that needs to be done but after running the numbers factoring in all costs ( *considering this would be a cash purchase) the ROI would be around 9%. How can I better analyze this deal? What other things am I missing or should factor in? What are your thoughts so far on this type of investment property considering its a 2 in 1 lot/ half commercial half residential?
Thank you!
-Nay