What to build a profit making building on a land we own.

Question

Dear friends,My wife and I have half an acre land close to downtown San Jose, CA. The property is close to the main street, but not on it, so it's not ideal for retail.The property is also zoned as Light Industrial. Other businesses around are all body shops, machine shops and similar businesses.However, at this point in time, this area is fast developing and the bodyshops and machine shops are starting to get replaced by housing units and other consumer oriented businesses.We would like to build a structure on our land and rent out. We dont have a lot of cash on hand to complete the project on our own. A couple of questions...1) How do you determine the ideal type of building to build on this land?2) How do you go about getting a loan for the build?

Carlos Ptriawan · Answer

Have you calculate the profit between if you sell now and build-to-rent office/industrial space with 3-4% cap rate only ? it seems the new building can be used by small business only.

Carlos Ptriawan · Answer

Also currently 50% of small businesses are closing shop, you may found difficulty finding a commercial renter.

Raj Sidharthan · Answer

Friends,I talked to a few commercial appraisers in my area.They charge around $2000-$3500 for a highest and best use analysis and the response I got from them was fairly consistent. They said that the highest and best use analysis appraisal tends to be fairly cursory. One person suggested a detailed zoning study, which is typically performed by a zoning or land use expert, including attorneys, land use planners, or architects.They pointed me to this link - https://lawyers.findlaw.com/la...I am definitely going to talk to a few of them, but my property is a small under $1M property and I feel that using these big law firms is an overkill and they will charge me an arm and a leg, after all I am not preparing for a large project.Any tips on doing such an analysis myself?ThanksRaj

John Smith · Answer

Raj-

Here is a link that you might be interested in. Google is in the process of getting their San Jose Master Plan approved.https://www.sanjoseca.gov/your...

Raj Sidharthan · Answer

@Scott MacThank you Scott. Definitely worth considering.

Scott Mac · Answer

What about paid 24 hour parking with a fence and a guard (or a camera service type guard and a gate).

Nice smooth blacktop with fresh white stripes and some shrubs to make it look nice, surrounded by a 10 foot chain link fence.

When I go to Los Angeles, so many of these places are just dirty dust bowls with degraded blacktop, or under some earthquake prone building that will fall and crush my car and me.

And on street parking is either hard to find, or has sketchy looking individuals lurking around the area.

Something a little nicer would be a draw for someone like me.

Maybe your lot could be something like that.

Good Luck!

Rick Trivedi · Answer

@Raj Sidharthan - First of all, congratulations on having a piece of land in San Jose - there arent many vacant lots anymore! There could be several options depending on permitted zoning. First thing I would suggest you do is call City to understand the zoning flexibility and what could be allowed. Based on your preference (long term buy and hold) vs short term (sell or build and sell). We are local and happy to help.

De Rasche · Answer

one option we have done lately, as we are risk averse, is get a plan and then sell the land and plan.

We market ag. land and so much per acre pricw is limited, then we had a lidar and lots platted and boom it made a vision more maketable.  Just by putting the lots on paper made it x factor more profitable as a prer cent of the planet has to see the potential, not just hear about it.

Raj Sidharthan · Answer

@Dustin Allen Great. Thank you very much.

Dustin Allen · Answer

@Raj Sidharthan

Maybe up to a few thousand dollars. It’s free to call consultants and check their rates. I would call a few, describe your problem and see what they can offer you.

What to build a profit making building on a land we own.

Most Popular Reply