Only thing working? Stacking businesses? Own the Property and Own the business?

Question

Folks, it is tough out there! I really love having to come up with $4M for a $10M multifamily project, have it take 4 years from start to finish then not be able to refi out because rates are too high and/or rents are not keeping up with expenses. (investors love it even more!). (I have noticed that 30% expense ration is a ghost of the past in my town, a mythical unicorn of another time.). How do we solve this? What about stacking? You own the business that is leasing the property. (A franchise business that will always need a home and a franchise that makes you money). Your time is the scarce commodity, (and maybe capital). If you can fill your commercial space and find a partner in a franchise or regular business, this can really move the needle. A 5.5 cap on a building is measured by a cap an NOI (5 cap-9 cap). That is one multiplier, the EBITDA on the business can give you a 3-5x sale price. You control your rent and value. The question is: What business is recession proof and AI resistant? Is anyone doing this????

Henry Clark · Answer

OP. Do deals to your size and risk parameters. Whether 2 acres or 80 acres. We only establish the lots and don’t build houses. Out of our risk parameters. Could be a house with 20 acres. Could be the Rock Quarry in your town. Etc.

Lookup my Silver Springs or Journeys End Subdivision posts.

Everything is subject to zoning.

We look for a 120% return over 5 year sale period. After all land and development costs. Any less and it is not worth the risk. Smaller divisions mainly take 2 to 3 years to sale.

I like Nasty properties. Too small for farmers. To large for single home owner. Poor land. Preferably road access on2 up to 4 sides. These are properties apartment developers won’t want. People like water, boulders, trees, views, walkout basements, away from town, but near town, etc.

Hazel Wilder · Answer

This is the 'In-N-Out Burger' or 'Walgreens' model, and it's exactly how the most sophisticated family offices are pivoting in 2026 to escape the multifamily debt trap.

You're hitting on the Wealth Multiplier that most people miss:

• The Real Estate: Valued at a cap rate (let's say 6.5% for a solid commercial asset).
• The Business: Valued at an EBITDA multiple (3x–5x).

When you own both, you aren't just a landlord hoping a tenant pays rent; you are 'stacking' the yield. If the business is a franchise, you’ve essentially created a self-funding annuity that makes the real estate 'recession-resistant.'

To your question: What is AI-resistant and recession-proof? It’s anything that requires a physical 'wrench' or 'human touch' that can't be outsourced to a server farm:

Medical/Urgent Care: AI can't set a broken leg or administer an IV.

High-End Pet Grooming/Boarding: People spent more on their pets in the last downturn than they did on themselves.

Trades-Based Franchises: Think HVAC, plumbing, or electrical showrooms. These are 'needs,' not 'wants.'

The 'Lender' Perspective on this: The beauty of this 'stacking' model is the financing. If you own 51%+ of the business occupying the space, we can often look at SBA 504 financing.

The Win: You’re looking at 10% down instead of the 35–40% you’re currently fighting for in multifamily.

The Exit: You aren't just hoping for a refi; you're building a business that can eventually be sold with the real estate as a turnkey package, which commands a massive premium.

I’m currently helping a few clients move out of the '100-unit apartment headache' into these 'Owner-User' commercial plays. If you want to see how the leverage stacks up on an SBA 504 versus a traditional commercial loan for a project like this, I'd love to chat. It might be the solution to that $4M equity problem you're facing!

Henry Clark · Answer

OP. We do Self Storage. Or you could do RV/Boat or Contractor bays. Did a quick search for Salem, Oregon. There are several properties (subject to zoning) that fit size and price range. Your land prices are higher but offset by your higher rental rates. 25% down for conventional or we have done commercial construction loan converted to SBA 10% down 20-year term with participating bank doing 10-year balloon with 20-year amort period.

Recession and AI proof.

Looked at your Self storage market as far as rent levels and doable. Your rents are higher than ours.

I would do mixed offering. Larger units and Conex's/cargo containers if allowed. Some smaller units. To be competitive but not head with mainstream competitors.

If 4 acres, day one no renters $1.5mm value add. Higher as your Occupancy rate goes toward 100%.

Would look at more of your commercial/industrial listings and approach from a Value-Add standpoint.

Don Konipol · Answer

“I like Nasty properties. Too small for farmers. To large for single home owner. Poor land. Preferably road access on2 up to 4 sides. ”.

A single, successful strategy that could bring “life changing” profit to the practitioner. Not anything like the overhyped, oversold, over competitive, rarely workable “wholesale”, “flip”, “novation” methods. Yet the vast majority (99.9%) of inexperienced wannabes would rather believe that they can “wholesale” MLS listings from home with no capital rather than do the hard work necessary to obtain the knowledge, experience, and capital needed to engage in a potentially lucrative and successful investing strategy as Henry’s.

Evan Polaski · Answer

@Don Konipol, you clearly haven't listened to Cody Sanchez or Alex Hormozi enough. Owning a business is super easy, low risk, cash printing machine. The only reason they sell courses on it is because the business are SO EASY and profitable, that they simply have too much time and need to share. It would never, ever be that businesses actually are not that profitable and require a ton of work...

@Chris Blackburn, while I respect your point, it also proves what most seasoned real estate investors know and most young people don't: real estate is not a get rich quick scheme. It is capital intensive and takes time. When structured well, it is a great store of wealth with minimal work needed.

Owning a business can create a great income, but it is constant, never ending, work. All day, every day. Whether it is a franchise (and the continual cut into revenue they take) or some other business, where you commonly are relying on low wage labor or a very low barrier to entry business, where you will be bombarded with 30 new competitors every month.

There is no free return. Everything comes with its own risks. And most markets, whether we are talking real estate, franchises or business buying, are overwhelmingly traded at prices that compensate for those risks, not always, but generally.

Ronald Rohde · Answer

Its just doubling down. Will you have two sets of investors or just 1?

If you're the common element, how do you handle conflicts? There will absolutely be a scenario where the tenant should pay extra $1 or its a loss to landlord. How will you resolve these?

John Berardino · Answer

@Chris Blackburn, one clarification on the SBA 504 piece, because it's easy to get wrong in a stacking structure. 504 is for owner-occupied property. The test is how much space the operating business occupies, not how much of the business you own. If the operating company is buying an existing building, it has to occupy at least 51% of the rentable space. For new construction it's 60% at the start, with no more than 20% leased long term (13 CFR 120.131). SBA's 504 page also excludes "speculation or investment in rental real estate," so a multi-tenant commercial project where you lease to third-party franchises wouldn't qualify. Owning one operating business that occupies most of a building you control could.

The usual structure is a real estate holding entity (the "Eligible Passive Company") that leases 100% to the operating company. The lease has to run at least as long as the loan, the rent can only cover debt service plus holding costs, the operating company guarantees or co-borrows, and every 20%+ owner of either entity guarantees (13 CFR 120.111). That rent cap also speaks to @Ronald Rohde's conflict question: with 504 debt in place, you can't set the rent above debt service and property costs.

Worth talking to a CDC early, before you design the building, so the occupancy split works.

Disclosure: I run sba504loanhub.com, an independent educational site about the 504 program.

Henry Clark · Answer

OP check Self storage or

Country subdivisions out.

In Paris enjoying ourselves. My phone

Covering 4 locations. Used to be 8 till

We cashed out some.

Only thing working? Stacking businesses? Own the Property and Own the business?

Only thing working? Stacking businesses? Own the Property and Own the business?

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