Would like to hear what other Milwaukee investors think of those small storefronts on busy streets in the old parts of the city.
The reason I ask is so often they have 2 or 3 residential units as well as the small storefront.
So just imagine a small , 750 s.f storefront on say Villard, no parking, and it has some 2 units, just as an example I made up. I'm sure you can all picture those, they are all over the place on busier streets in the old neighborhood.
I think often these could be worthless, but I was wondering anybody have any first or second hand experience with these? Are they hard to rent out and retain tenants? How much s.f. do you need to have it attractive to convenience store operators? Is it worth it to buy and convert to residential, is that hard to do? Is it hard to rent out the residential units connected to them, how much less would the rent be then the same unit on a residential street?
I think the challenge would be to find a viable small business.
Are you talking about the place for sale on North Ave? If so, I had an accepted offer on the place and was going to covert it to residential, which was going to take a lot of work. However the hard money lender I'm working with would only lend me the purchase price. He said it was too risky and it was difficult to figure out ARV.
I saw potential, but he didn't, so I had to back out of the deal. I wasn't too afraid of the deal, because they are working diligently to revitalize North Ave and business are popping up everywhere. I feel someone would have moved into the home and converted it to some sort of business. But I'm just not positioned to take that kind of risk yet.
I have looked at a few but was always concerned about finding and keeping a commercial tenant.
I know a lady who has a grant for a revitilazation program on north. Why convert ? My father has own multiple properties like this and ran business that did well.
What section of Villard?
New Milwaukee public library off 27th - 31st Villard
Some developers are pouring a few dollars around the new library.
( luxury apartments, car title loan business, and etc )
Now if you’re talking Tosa area: my answer would be yes all day long.
If $500,000 - $650,000 cash would drop in my pocket I would place
a great deal it into female hair shop and real estate. Female hair
and pursues are billion dollar industry in my opinion.
Thanks for the question @Dan C. and the responses guys. I have been approached by an out-of-state commercial/industrial investor about these properties but have to slow down since there are so many challenges including finding reasonable COMPS, viable Milwaukee businesses with verifiable income statements, etc. They are worth looking into though since with the turning economy, they could be the next big thing. My 2- cents.
" viable Milwaukee businesses with verifiable income statements "
I worked pro bona ( free education experience ) last year with
another investor who picked up a few building for student education purposes.
He was purchasing a day care, elementary, and middle through high school.
Owners of the three buildings drove expensive Shelby cars like it was everyday occurrences. At first, I was really nervous looking over their commercial
financing, but that reason we have colleagues.
You could have the best business opportunity, but it was still come down to location.
check for illegal utilities connections during your due diligences
and have at least 60 days for closing.
@Nicole Pettis interesting, thanks. No I am not talking about any specific property, there are a huge number of them in the older parts of the city, and certainly North Ave would have many.
Interesting thoughts thanks. For further discussion, take 2922 W. Atkinson. This is a very good example of the type of property I am talking about, a very small storefront with a couple residential units. What are your thoughts on this example?
My take - you can see it was once a convenience store, but I think it is a pretty poor site for a convenience store or really anything - tiny space and no parking. How well would this convenience store compete with for a store with a much better site like the one at 39th and Florist - (more s.f. and parking). @Jenkins Ramona site that can attract a good salon would be great, but I think this example just wouldn't attract that type of tenant.
2922 W. Atkinson : not my cup of tea
That property would be easier to convert, but that is a tough neighborhood.
@Carlton B. @Jenkins Ramon Yeah I know, but my larger point is about that kind of structure. Let's say instead of 4500 N it was 6500 N, I still wouldn't like it, I don't think it has much use. Let's take it to another extreme, say it was in Shorewood, it would be OK, you'd find someone wants a small office or maybe a small retailer. But outside of the strongest areas, if I bought a buidling like this I'd be afraid of just ending up with a storefront church paying practically nothing or empty.
As Ramon mentioned, the stretch of Villard around 35th has a little business district that at least from driving through, seems to have some life to it and its not just all dollar stores and whatever other national junk chains, its got a lot of what look like locally owned, unique small businesses. Now, I have to admit that I don't take note of if the same ones are there for years or if its a revolving door of small retail failures (which almost certainly means unpaid rent) but that area looks more attractive to me than 29th and Atkinson.
One thing about renting commercial, is that depending on what they want to put in there, the existing utility services can be a HUGE factor. If its a convenience store, they're going to want LOTS of cooler and freezer space, which means LOTS of juice is needed and 100 amp service won't cut it, maybe not even 200 amp service will be enough, which means a HUGE cost for upgrading that service, which sometimes can be split or even covered by the tenant, that all depends on how badly they want that space. If they think you have a hot spot that can't be beat, they might gladly pay for the whole upgrade but if its one of many similar units, forget it. Same goes for water mains, most of those old buildings have what we now consider a tiny main, if you have a restaurant or any other high water usage biz going in, they'll NEED a larger main and that can be a lot, like well over 10 grand many times as they have to run a new main to the city line, which means tearing up the road in most cases. Fire sprinklers are another concern, most every city wants them installed for any major renovation, its a huge expense and also ties into the water main issue, adding sprinklers alone often means you'll need a much larger water main.
The other concern I'd have would be about converting to residential, unless you're getting gov't funds for that, you'll be competing against a market where many, maybe everyone gets gov't $$$ for the project and one thing that personally gets me a little riled up is seeing the same handful of names of companies/people who seem to be in on every single new project announced in the central city and getting big gov't subsidies, which is NOT saying there's anything illegal like bribery going on, but maybe that we have a handful of people who have a good "in" with the people choosing who gets that cash and they know these people will get the job done, so it may be hard for an outsider to get in and get some of that gravy train of taxpayer $$$$$!
Most of those convenience/small mixed stores used to generate sales and other tax monies but not necessarily what most currently well organizing communities want to support (liquor stores mostly as breeding grounds for more troubles). The city and local established businesses definitely need to scoop them up for upgrades/re-uses similar to other now thriving neighborhoods like Menomonee valley/Third Ward projects.
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