Multi Use

[Tim Griffiths]

So, I'm a newbie, I've been looking but the numbers haven't made sense for a lot of the houses in my area, either slums or overpriced or both.

I will be looking at a a multi use building tomorrow and I wanted some feedback from the community.  It's a  2 commercial spaces and 2 1 bedroom apartments above the commercial.  It's for sale $75,000 below assessed value which makes me wonder.  My question is, what's the general feeling on buying mixed use property if you're just starting out.  I can afford it without any creative financing and the commercial tenants are well established, I just don't know.  Any thoughts from the experienced folks would be appreciated.

[Sam LLoyd]

Insurance.  Commercial insurance is a bear.  I think it depends on the current commercial use, how much insurance is going to cost, and what they are going to require you to do to the building.  Also, the type of building may limit the uses your insurance will cover.  I've been going through this all summer... with my insurance refusing to cover certain tenants and rates doubling based on what the tenant will be doing with the space.... partly because it's a mixed use building.  So get an accurate insurance quote and go after it.

I'm sure you're aware that commercial units tent to have longer terms and longer vacancies. It's been my experience that commercial tenant can surprise you too.  They've been there 30 years, and then not.... and then you have to get the unit back up to speed.  So make sure you have the funds to cover an extended vacancy with repairs.