Getting started in Commercial real estate

[Adam Jarrell]

Hello, 

I work with my parents in a small business, currently the business resides on about a 7 acre plot of land , with about 2 acres being used by the business and its facility. The other 5 acres located next to us is flat land that is zoned commercial. Currently my parents are the holding company for the property and are paid rent on a monthly basis. We have discussed and want to develop the other 5 acres commercially, we will all pitch in equal amounts of money, and develop the property. This is something that we have never done, but know several people who have. That being said, what is the best guide to use to learn the steps to take for us to create additional income ? I am younger and I am looking at this as a way to create additional side income throughout my life, they are looking at it as a supplement for retirement. 

[Karen Margrave]

@Adam Jarrell To start with, you want to know the demand in the area for commercial buildings. Is space hard to come by? Are rents high? What types of businesses are on the commercial land that is close to you? What do you think the market for your building once developed would be? 

How big of a building can you get on the parcel? Would you be building one bigger building or smaller buildings? 

Owning the land puts you in a position to test the market before really investing a lot of money into a project. You can simply put up a sign "BUILD TO SUIT", which will give you an indication of interest.  Of course you will need to know exactly what you can and cannot build on the land, how many parking spaces are required, what will be required in the way of setbacks, landscaping, curb, gutter, sidewalk, etc. What types of commercial is allowed in the specific zoning, etc.? 

If you aren't able to get all this information yourself, you might want to hire a developer as a consultant or potential partner, though I'd stay away from partnering if you want to hold the property for a long period of time, and do it more as hiring the developer/builder on a contract basis (get bids, and check references and licensing)