2nd Story Above Small Town Retail

[Charlie Barnett]

Brand new to the topic of real estate investing.

I was wondering what everybody's thoughts were on these types of properties (the 2nd story and above):

Places like these are in every small to smallish town across the country. The above pic is just a random town I zoomed in on in Google Maps. 

As far as I can tell they are almost completely vacant. Are they relics of a bygone era? Did automobiles make them obsolete? Is anyone anywhere doing anything productive with them?

I suppose if there were really any opportunity here, we'd see more of these occupied.

Curious as to what the opinion was of those who are more seasoned than I am in the real estate game.

[Justin Bottorff]

I agree there is opportunity. We are on our second property like this. Our current project has a commercial space on the main floor and converting the top into two residential units. This is a scary option for several reasons. Old buildings with flat roofs can get expensive fast. The construction cost can get out of hand if you are not careful. Finding the commercial tenant is the most difficult part for us. Retail in small town America does not seam to work. Our rule is to find a class A tenant for the commercial space before buying the deal. Finding people for the residential space has been easy. Seems to be a large demand for people to live down town. Even in small towns.

Other problems to think about is separation of space, noise separation, and re-sale problems.

The pro's are the following:

You can get these buildings for almost nothing

Almost no exterior maintenance (no driveway to maintain, city takes care of snow removal, and no lawn to mow.)

The local cities are generally willing to help if they can (we got a 15 year tax abatement).

If done right can produce a high cash flow

There are a lot of great building in the downtown's of rural America that can be converted/ rehabbed.