I would look at the commercial building as if you were buying it from a pure investment side. Would you have interest in it if your coffee shop wasn't there? What other opportunities does it have? What are the businesses currently there? Is there a way to add value? Is it in a nice area?
If you can answer all those and would still be interested in it then that might be the route to go at first. If you're trying to talk yourself into it for the coffee shop then I'd probably go the residential route and then look for an area where you'd like to buy for your coffee shop.
In our minds we would never want to buy commercial property that isn’t residential, but we also don’t want to suffer the loss of our coffee shop either. The commercial property is in a decent area but we wouldn’t buy it otherwise. It’s already fixed up as of pretty recently, but the owners of it would probably give us a sweet deal, most likely. We have a good relationship with them.
I get looking at it like an actual good investment, and our coffee shop still isn’t a good investment, it’s been a liability since the beginning.
@Jon Jones a property is either commercial or residential. I don’t believe it can be both
This may sound harsh. If you need to bail out the coffee shop, then why have it in the first place. The fact that you have the shop really shouldn't be a determining factor on your deal. If the strip mall would allow you to have the shop for free (or less than current), then realize that the coffee shop is still the problem. If the coffee shop is profitable, I don't see the point in co-mingling the businesses. You'll just need to come to terms with the fact that the coffee shop makes x and the REI will make y. If you buy the strip mall, x will go up and y will go down. It will be a net zero.
Invest in what you're comfortable with. In this case, it seems like residential is the way to go.
Larry you’re right. We’ll buy the commercial residential portfolio instead. I don’t want the coffee shop to put such a draw on our real estate investing that it inhibits future growth. If the coffee shop is still around after we have a feeble cash flowing portfolios then we’ll revisit the commercial space. Thanks guys.
Definitely do what is best for you. No one on here can really tell you that for certain. I only want you to realize that propping up the coffee shop is probably not the best option. Investing is about making money. Emotions need not be considered. I guess what I am saying is that you need to decide whether or not the shop will allow you to reach your goals.
What do you mean by "commercial residential"? A multi-family property or what?
I think there is some confusion. :-) He was saying we didn't want to buy commercial property that wasn't residential--not meaning that some commercial properties are residential but rather we have never planned on buying property that was residential.
Oh, the joys of online communication! :-D
Yeah a multi family property. Our plan is to purchase a multi family portfolio, in some circles called commercial. We plan on getting into 6-10 doors on our first deal, if we can find someone that is willing to go low enough for us. We Definitely we find someone, but it’s going to take some scouring of the market.
Thanks for your help Larry, this is the Last big lump of cash we have left and we def don’t want to mess it up over a restaurant.
Best of luck to you!