Is it a rental or a business store

General Landlording & Rental Properties
9moFollow

Is it a rental or a business store

Javier RosalesPro Member
Los Angeles Ca · Member since 2019 · 107 posts · 15 votes

Hi BP community! their is a potential deal i might want to shoot for. but its a mix-use. the lot comes with a triplex and a detached garage that was converted in to a store. on the any one have ever own a mix use lot like this. how was the experience

1Reply
105 views

Most Popular Reply

Bill HamptonBusiness Member
Accredited Investment Fiduciary, AIF®, Financial Planner, Tax Strategist, Real Estate Investor · Atlanta, GA · Member since 2012 · 2k+ posts · 978 votes
9mo

@Javier Rosales

Make sure the garage conversion was permitted and has a certificate of occupancy for retail. 

Good luck. 

404-482-3170
Hampton Tax and Financial Services LLC4.7106 Reviews
WebsiteView Page
1Reply
See this reply in the discussion

4 Replies

Jump to latestLatest
  • Bill HamptonBusiness Member
    Accredited Investment Fiduciary, AIF®, Financial Planner, Tax Strategist, Real Estate Investor · Atlanta, GA · Member since 2012 · 2k+ posts · 978 votes
    9mo

    @Javier Rosales

    Make sure the garage conversion was permitted and has a certificate of occupancy for retail. 

    Good luck. 

    404-482-3170
    Hampton Tax and Financial Services LLC4.7106 Reviews
    WebsiteView Page
    1Reply
  • Scott Nachitilo
    Property Manager · OK · Member since 2024 · 98 posts · 74 votes
    9mo

    Hi Javier, mixed-use is a great option for cash flow, but the garage conversion is the biggest red flag possible until proven otherwise. As @Bill has said, you need proof of permits and a valid Certificate of Occupancy for retail. If the garage wasn't converted legally, you potentially face the risk of having the city shut you down, forcing you to retro-fit it (often for big dollars), and possibly getting denied on insurance claims. Additionally, check to see if your lender and insurance company are OK with mixed-use properties; many lenders and insurers are squeamish about them.

    1Reply
  • James JonesPro Member
    Investor · Collierville, TN 38017 · Member since 2017 · 778 posts · 573 votes
    9mo

    I’ve owned and underwritten a few deals like this, and the short answer is: what matters isn’t how you think of it, it’s how the city, lender, and insurer classify it.

    A detached garage converted into a store pushes this firmly into true mixed-use, not residential with an accessory structure, unless it’s fully permitted and zoned that way.

    A few things to verify before you get excited about the numbers:

    • Zoning and permits – Is the commercial use legal, non-conforming, or outright illegal? This determines everything downstream.

    • Utilities and separation – Separate meters, entrances, and addresses matter more than people think.

    • Financing impact – Many residential lenders won’t touch it. You may be looking at commercial terms even if 80 percent of income is residential.

    • Insurance and liability – Commercial use changes coverage and premiums significantly.

    • Exit strategy – Your buyer pool is smaller. That’s fine if you’re being paid for it on the front end.

    Where these deals work well:

    • When the commercial unit is legally permitted and already stabilized

    • When pricing reflects the financing and resale friction

    • When you’re underwriting it as mixed-use from day one, not trying to “force” it into residential math

    Where they get painful:

    • Unpermitted conversions

    • Seller saying “it’s always been used this way”

    • Investors assuming residential appreciation and liquidity

    Experience-wise, they can cash flow well, but they’re less forgiving if something goes sideways. This is a deal you buy with margin and clarity, not optimism.

    If the discount compensates you for the complexity and the use is defensible, it can be solid. If not, you’re inheriting risk without being paid for it.

    1Reply
  • Javier RosalesPro Member
    OP
    Los Angeles Ca · Member since 2019 · 107 posts · 15 votes
    9mo

    @Bill Hampton @Scott Nachitilo @James Jones @Rudy Avila

    The subject does have two separate addresses, one faces the busy street, the other faces the residential street, its on a corner is why. looking at the county website, under permits, 

    one permit is for: MISC SITE IMPS Date issued 8/20/2025

    Date active 12/9/2025. the other permit is for

    the other permit is for: ADD/REMOD SFR Date issued 8/9/2023 Date active 12/1/2023.

    I also sent over a lot of characteristic questions about the subject, that way i know all about the lot and the subject. while all this is going on am also renovating a vacant unit to get it ready for occupancy


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