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Updated about 2 months ago, 10/20/2024
Commercial Car Lot
Having thoughts putting an offer in for a car dealership lot in the intercity (Class C neighborhood) that I would like to lease long term NNN. Has anybody had experience with doing one and the results?? Demand, quality of tenants, etc.
According to my analysis should give a 12% CoC return but this is my first commercial property purchase just like some insight or if I should pursue other forms of commercial real estate.
Thank you in advanced.
- Lender
- The Woodlands, TX
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Quote from @Cody M.:
Having thoughts putting an offer in for a car dealership lot in the intercity (Class C neighborhood) that I would like to lease long term NNN. Has anybody had experience with doing one and the results?? Demand, quality of tenants, etc.
According to my analysis should give a 12% CoC return but this is my first commercial property purchase just like some insight or if I should pursue other forms of commercial real estate.
Thank you in advanced.
It’s a little tricky because it’s so location dependent. What constitutes a good location in Kansas would be totally different then NYC.
We can assume, a locations proximity to TRAFFIC, either pass by or generated by location would be key. The highest traffic sites would have a use “higher and better” than a car lot. So for these locations, leasing to a car lot is a “tax payer”; no cash flow just enough rent to cover the insurance and property taxes and perhaps a moderate loan service.
BUT, I am confident that while the above covers MOST situations, in a country of 300 million + people there are locations where a 12% ROI exists for a car lot - though you may be giving up the "windfall" of a developer wanting and willing to pay a premium for your lot.
Do further research on your target acquisition. If you're not comfortable with your analysis and still want to pursue the purchase, I would recommend engaging the services of a real estate consultant holding the CRE designation and paying them for a short form report.
- Don Konipol