Looking into a commercial property that has a retail business on the bottom floor, with second and third floors that are storage now, but could be turned into luxury apartments. It's a really old historic building, in a great part of a thriving city. Just talked with the guy who is running the business on the first floor, and briefly walked the building (going back again on Monday with a realtor). The second and third floor don't have heating or AC run to them yet, so that would be a rather large expense, and I have no idea where to really begin with estimating that kind of cost? The building seems to be at a really great price, but wondering if I just don't have enough upfront capital to add the heating/AC to the two floors, as well as renovation to turn them into apartments (the two floors would need quite a face-lift to get them into shape). Anyone have some advice/experience with something like this? Thanks!
First you need to check with the local government if they would allow apartments on the upper floors. Best to check the zoning to see what you would need to do.
I would not immediately jump to adding AC. First see if it will pencil if you just do the basics and just turn the upper floors into apartments and if it will cash flow (bare minimum to get them livable without added amenities. From there, if it does pencil and you find there to be room start looking into the expenses to add (like the AC and more facelift) that would best be done by having a contractor come in with a quote.
You can do all of this during your DD period.
I like your vision @Zach Yonek you do want to get the basic done first. There are lots of different ACs that you could add, but I would only do so after structural issues are addressed.
Plus, from the sound of it, you're going to face some unknown hurdles, so keep your powder dry. Those floors are likely being used for storage for a good reason.
@Zach Yonek make sure you create a list of items you need to complete along with a timeline of your due diligence. Don't let any task slip through the crack, make your checklist.
Thanks @Jonathan Orr and @Al Williamson ! Yeah I would want to double check with the city. I was just going off of the MLS listing where they mentioned them being able to be turned into condos/apartments. Right now, there aren't even bathrooms on either floor, so I'd have to look into whether or not there's even plumbing as well as any other structural things. I didn't even get to walk through it thoroughly yet (I just went to see the location and the store owner asked if he could help with anything, so I told him, then he offered to do a quick tour). It's starting to make more sense why it is probably listed as low as it is :) I'm new to this whole real estate investing thing, and I really appreciate your input! Thanks
Thanks @Danny Randazzo ! Yeah, right now I'm at the very beginning stages of getting all that stuff together.
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