Buying mixed use property and possibily putting business there

Commercial Real Estate Investing
13yFollow

Buying mixed use property and possibily putting business there

Chris Masons
Investor · Union, NJ · Member since 2011 · 838 posts · 295 votes

Hi guys,

Wanted to bounce this off you for additional thoughts and feedback I may be missing. Though it doesn't deal directly with RE it does indirectly deal with Real Estate...

I am looking at a 4 fam. mixed use brick building consisting of 3 residential apts and a store front on ground level (currently a cafe)

If I bought this building I was considering having the cafe move out (their lease is up) and maybe putting in a laundrymat. There will be a significant upfront cost/investment to do this but I am thinking it can be a long term profitable little side business ESP. b/c of the fact I will own the building and will not have to pay rent to anyone buy myself as well as it won't require much overhead to run the business.

The other positive factor is I would buy the equipment new so there would be low maintenance/repair issues.

The way I see it my biggest expenses would be utilities IE. water and gas electricity, as well as insurance and then whoever I hire to run the business. I need to find out the average costs associated with this type of business..

As I said I am just kicking around this idea and wanted to get additional input and feedback from anyone who may or may not have experience in this type of venture.

Commercial RE is not my Forte and the thought of trying to find a commercial tenant every 5 or so years is not that appealing to me so I Thought if I can turn the space into my own business that kind for the most part run itself it would be a win win situation.

I welcome thoughts and or things I may have overlooked.

p.s. this business venture assumes the area is good and there is not another similar business nearby. Again I am just kicking around this idea. It sounds good on paper but the reality of it may be quite different. ONE thing is how the laundrymat business might impact the 3 other apartments in the building...

as always thanks guys!

Chris

0Reply
7 views

5 Replies

Jump to latestLatest
  • Jennifer Lee
    Real Estate Broker · Gibsonia, PA · Member since 2013 · 828 posts · 260 votes
    13y

    First of I think its a great idea ;)

    First you need to call a good honest commercial broker.
    Ask if anyone is looking for a space. My answer was no, avg vacancy is more than a yr here.

    If the answer is yes, locking in a long term commercial tenant can be a great thing. I love my retail tenant bc they do everything themselves and they care about the property.

    As for your Laundromat. Is there a demand? Everyone here has own laundry. But go to cleaners....
    my good friend also REI, ran her own automated laundry. Security pin door, she doesn't man it. She ended up losing $$$, bc no demand and bad ppl started hanging around.

    But I like your mixed use idea and running your own business.
    needless to say, need a lot of due diligence.

    I bought retail with tenant bc right now no new tenant. It was owner wanting to cash out. Tenant is great been around 4 yrs.

    0Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    13y

    Chris Masons I personally think it's a bad idea. Who wants to live above a laundromat? Washing machines and dryers going constantly, the strong smell of fabric softener from the vents, all different types of people coming in and hanging around .. I think it's a bad mix with residential units.

    Aside from that, have you checked with the local building departments yet? In California permit fees for laundromats are very high (I think it's due to the water usage and how much dirty water is dumped into the system, etc.) Then there's the cost of ripping out the walls, to install new water lines, new electrical, etc.

    It seems to me a cafe is a much better tenant for the situation. Sorry to rain on your parade.

    0Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    13y

    Chris Masons Actually, there's a thread that has people talking about laundromats, you can get them to weigh in. One of them is Brandon Turner
    Here's the link to their conversation. https://www.biggerpockets.com/forums/432/topics/83696-laundry-equipment People that actually have experience and know the subject, rather than opinions like mine :)

    0Reply
  • Chris Masons
    OP
    Investor · Union, NJ · Member since 2011 · 838 posts · 295 votes
    13y

    Thx Karen and Jenn for your constructive feedback, I appreciate it.

    After more thought I am approaching this property with a buy as is strategy and the conversion on the exisitng Cafe into my own Laundrymat is not so much in the picture at this point.

    3 residentials mixed with 1 commercial unit I think is a good way to get my feet wet on the commercial side.

    thx again for all your feedback!

    regards,
    Chris

    0Reply
  • Alex M.
    San Jose, CA · Member since 2013 · 39 posts · 5 votes
    13y

    You will definitely have to get the laundrymat approved by the city because you will be discharging a LOT more water into the sewer system. If sewer main pipe in the street is undersized for the flow you propose to discharge, the only way to get the plan approved is to pay to upsize the pipe in the street which will cost more than the building itself.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free