Commercial Car Lot

[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. 

[Charles Carillo]

@Cody M.

I would add a Phase I Environmental Site Assessment as a contingency to any offers on properties more susceptible to environmental issues (dry cleaners, gas stations, auto repair garages, etc.)

[Don Konipol]

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.