ISO Advice: Single Family converted to Commercial on busy hwy

[Derek Clark]

I am under contract on a property that is currently zoned commercial. It has a 1200 sqft 3 bed 1 bath home on the front side of the property facing the busy highway and the back side of the property is open land where the possibilities are endless. The front of the property sits on a busy highway with 20K+ cars a day going by the property. There are roads on both sides of the property for multiple entry points if needed. The owner of the property ran a antique shop there for the last 15 yrs and is looking to retire. 

I will not close on this property for another month. I am seeking advice on the next best step to get the right tenant in the property and at the right price. The area is growing quickly and I feel like it is a great location for a long term investment. 

I am also thinking of putting up advertising next to the busy highway and would love to hear your thoughts and any advice you may have on something like that!

thanks a lot!

[Jeff Kehl]

@Derek Clark I have a few properties like what you describe so I can provide some info but I'm new to them as well so hopefully you'll get some other responses from more experienced commercial investors.

First, on the advertising, this is a great investment but is much harder to get than what you might think. A single billboard on a busy street can make you as much as a tenant with no expenses. The problem? There are very strict regulations on how many and what type of billboards can be put up and what I found was that if it's a good area for a billboard they are usually already there. In my case I had the perfect spot but there was an existing billboard within ? (set by local regulation)feet of it already. You can check this easily by calling one of the big billboard companies and asking. I talked to Lamar.

As for the property itself, I'm a big fan of picking up properties with great commercial potential but with current cash-flow to pay for it while I wait for it to realize it's potential.

Really what you want on a parcel on a busy street is re-development to highest and best use, fast-food, hotel, strip-mall, etc. 

To get that you need a good commercial broker. I'd suggest contacting several like Marcus & Millichap, CBRE, and Bull realty and have them come out and tell you what they think should go there.

Likely for that the existing structure is worthless because the best land is the closest to the street so it would need to be demolished.

But if you don't make any headway with a commercial broker, I would rent the existing structure and be patient. Some ideas for that, insurance agent, tax preparer, hair dresser, bridal shop, massage, tattoo. Just look to cover your costs and only sign a 1 year lease. That way if you do get someone interested in the dirt you can terminate quickly. 

One last thought. You didn't say how big the parcel is. But some uses need a fairly large contiguous piece of land. So take a look at your neighbors as well and find out if you might be able to buy or option them as well.