Help me comp out a commercial property?

Question

I'm negotiating on a particular property that doesn't have a lot in the way of comps...so I'm trying to price it based on income.

2.5 acres along a major road in West Houston/Katy area.  3 components on property bringing in income.

10 year old 2 bedroom house on almost an acre, rented out for $1250/mo (haven't run rental comps but I think the house could get $1500/mo)

Tire shop that pays $1000/mo rent, been in business 10 years

About 1.5 acres that's used for truck/heavy machinery storage. Approx 50 spaces rented for $80/month, 3 spaces rented for $150/mo.

I don't know if this is the highest/best use for land. High end home development with 300k-700k homes on small manmade lakes  right behind it, a nice Kroger .3 miles away. Maybe developing it into something else is the way to go? A small industrial park? Storage units?

Another old house did get scraped off the land, so there is an empty lot with old plumbing and propane. Perhaps I could add some connections for a small rv park? (no zoning in Houston, but there are heavy HOAs, I'm pretty sure I could add some connections, but I don't know if that would be worth it..)

Value add opportunity might be to improve the fencing and mark out the truck rental spaces to maximize the space...the land itself holds a lot of value given the location. I'll look up traffic count, but I'm sure it has a crazy high traffic count.

I am not sure what the exit strategy is yet...I definitely want to buy and hold, but my husband would probably rather wholesale/wholetail/or flip and get the cash out.

Also open to lenders and partners on it, if it interests you.

Jacqueline Swagerty · Answer

This isn't my first deal. Just my first post on here. Too busy doing deals to be on BP much ;)  I have a handful of rentals, my real estate license, and I've been investing for 3 or 2 years. There aren't that many unknowns and I have plenty of connections for lending (but always open to new pml relationships). If the price is right the exit strategies open up...just having trouble pricing out such a particular property, since there are no comps. I do love the location, and would be happy owning it, or wholesale/wholetailing/listing it.

I guess I will just work backwards at a 9 cap and see what I get. Thanks for your response!

Charles Kao · Answer

@Jacqueline Swagerty

My first impression is that you have to many unknowns that even if the deal is a good deal I am not sure of your ability to execute.  I would try to get rental comps from a property management company, then I would try to bring it under an assignable contract for a more experienced investor to buy off you so you can make something off of it but also hopefully see how they invest with the property.  If you are unsure of anything be conservative which unfortunately may make it hard to make a deal of this property but as a new investor I think people often get too locked in on a deal because its first decent deal they've found when it's just take time to look for next deals.