Anyone ever bought a Post Office?

Question

Noticed a post office near me is for sale and still has some years left on a NN leas as well as two 5 year options.  Building looks great and is in good condition...interior of course, is your typical rural post office with a suite of boxes, manned desk and your typical ramshackle disorganized US Mail back room.  Any thoughts? Concerns? Bad experiences?

Brian Spohr · Answer

I've appraised a few post offices and IMO the rents are generally not set at market due to the Scope of Work determined by USPS. Leases are usually flat (no increases) and for a period of 5 years, with two 5-year options to renew at a predetermined amount. Also, repurposing the improvements for another use may be difficult depending on the construction. Likely uses would be a day care, fitness center, church, and if it's a smaller building, then retail. The clear upside is the incomes are very secure. Hope that helps!

Joel Owens · Answer

On my investment projects I look at DIRT FIRST(location), then building, then tenant.

You already need a defensive plan going in and a WHAT IF for options that pencil out and still make a profit.

A harder one I have seen is a Sonic. When those go out they have a very small building in the middle that tend to not work for most tenants and drive up parking.

One of the better uses I have seen on vacant ones is like a Hertz rental car or Enterprise.

The key with small commercial properties is knowing rents are below market with the current lease. That way if they leave you have room to increase the rents closer to market and can justify TI,attorney, and leasing commission costs.

For this post office analyze if it is one of the top spots in town where if vacant lot's of local tenants would want it or is it an old building off to the side where would be very hard to release and at low rent?

In each area urban,suburban,rural there are the best spots in town. It's okay having an old building if it's one of the best spots.

Patrick Liska · Answer

I am purchasing a building in a month and converting it to apartments. There is a post office in it that occupies about 500 sq'. They lease out that space, and for good rent, I have no intention on kicking them out. If they do ever leave, I will convert that space and some more that's behind it into another apartment. In the mean time like I said, I plan on keeping them there and getting my rent income from the government. I see that as a positive having the US Postal service in your building, people still go to them and you will have a steady income.

Justin R. · Answer

@Ken Bradley Chuckled when I read your question ... coincidentally, I'm under contract at the moment to buy a building that was the/an original Post Office here locally, built ~1886.  But, I'm guessing my strategy there probably isn't relevant to what you have in mind.

I'm on the hunt for some of those really old glass PO boxes that were typical in early 1900's post offices to incorporate into the renovation I'll be doing ... if the one you buy has some extra ones, do let me know.  ;-)

Joe Splitrock · Answer

@Ken Bradley I owned a commercial building in a rural town and the post office considered renting one of my spaces. I was less expensive than their current location and offered to build out the space at my expense. Ultimately they chose to stay where they were at. They were required by law to search other properties, but came up with some excuse why my property wasn't suitable. The agent told me it is a pain to move a post office and no benefit for them to sign up for the extra work involved. I guess the lesson learned is, they will probably want to just stay put long term in your location. That is good for you.

As long as the post office stays in business...

Ken Bradley · Answer

This is what I love about Bigger Pockets...this is all great info. Joe Splitrock, appreciate your first-hand experience because I was thinking it would be an enormous hassle to vacate this building and shift operations elsewhere.

Sam Shueh · Answer

Day care center.

Anyone ever bought a Post Office?

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