I'm a newer investor and own 1 SFH rental. I recently found an opportunity to buy a commercial property which is quite large for a good price.
The property is zoned so that I could use it as multifamily rentals, and I'd optimally like to do that, if it makes financial sense to do the necessary conversions. It has water sewer and electricity already connected, and I'm wondering if it would make sense to put up some additional walls, add in all of the needed appliances etc, and turn it into a multifamily rental.
@Tyler D. I'd get it under contract and use your due diligence period to find out all that information.
The very first thing I would do is talk to Zoning and see how many units are theoretically possible on the site. That would answer a lot of questions about whether or not to proceed on the project.
How long will the conversion take before you get first rent? Can you wait?
Someday in the future you will sell it. If it were finished now, who will buy it?
Sometimes you don't want to tie up a large portion of your treasure in one property. If you need money in the future, you have to sell the whole big investment or refi if you can.
You can change the building, but you can't change the location. Be sure you are in the path of progress. Else, if the neighborhood goes and you have a large percentage-wise investment in a bad place... oops. (My starter SFH neighborhood became 'the hood' and I lost a lot. I decided to only invest in places I would actually live - no more problems.)