Mixed-Use Deal, complicated and need advice

[Troy Fisher]

Hey All,

I got passed along a Commercial Mixed Use Property from my realtor, and am looking at wrapping the property up and getting it under contract. But there are a lot of moving parts and I need some advice on whether or not my ideas are viable.

It's a 7000 sqft property with 3000sqft of tenement/shared space bedrooms above there are 17 rooms. Previously they were rented for $325/month. Below are two retail spaces split evenly for 2,000 sqft. rented previously at $.80/sqft.

The property is currently vacant. The city just gave a pre-app for a multi-parcel new construction for a McDonalds. They have one parcel under contract, and they are negotiating with the City/State for a city owned parcel/easement. They city council has given approval for the sale but the state has some rights of refusal on it. The only property on the block they don't have under contract is the building I am looking at.

The story gets better, err, more complicated I guess. The previous owners bought the property because a National Retailer (WalGreens) was sniffing around and it's prime corner lot on the major intersection of town. They forced evictions as part of the purchase deal at the end of '12 before the city started to recover from the loss in property values. The property has been vacant since then. The property just last month received an NOD. I believe that McDonalds is happy to let the property go into default so they can by the NPN on pennies to the dollar. But someone who brought it out of default could either strong arm them and get top dollar or blow the whole development deal.

Phew. That's a lot of information and you probably need more. With some rehab money the upstairs could be converted to about 8 small 2/1's which run about $1400/mo in town. And the retail space is excellently positioned with current retail rates running $1.15/sq.

For me there are two exit strategies put under contract and flip to someone who is willing to play the waiting game for McD's to come around and buy them out, or purchase, rehab and rent. (My Initial Strategy) but if I could walk away with a 4% assignment fee I'd be a happy duck for not having to do any work.

What advice can you give me?

Thanks,

Troy