Best use for commercial property in rural area that won't sell

Best use for commercial property in rural area that won't sell

Rehabber · Nashville, TN · Member since 2013 · 16 posts · 5 votes

I purchased a commercial property years ago in which I operated a business out of.  The business has since been dissolved and I have rented the property to tenants off and on.  The property is in sort of a rural area and the market isn't very active.  The property recently became vacant and I have listed it for sale.  After several months and several price drops there haven't been any offers whatsoever.  It is priced low relative to comparable properties.  I still own the property under owner financing from the previous seller and between the payment to him and taxes+insurance I barely break even at what the building would rent for.  I could refinance it into a commercial bank loan and be about $150 mo. in the black but it just doesn't seem like it would be worth my while to keep it.  I live almost 2 hours away and don't have time to get to the property very often.  

The building is approximately 2000 sq ft. Half of the inside is nicely finished office space with a large lobby and 2 offices + file storage room.  The other half of the building is an open bay garage area with two 8ft. garage doors (uninsulated space).  This building sits on about 1.2 acres with most of the lot being unused.  The property is on a main thoroughfare between two towns with over 14,000 cars passing per day.  There are a couple of lakes nearby and a lot of people visit the area for that.

Some of the options I have considered are:

-Building boat storage on the the unused lot space (moderate initial investment, low return, fairly passive)

-Mini storage units (high initial investment, moderate return, needs active mgmt)

-Placing 1-3 mobile homes on the unused portion of the lot (high initial investment, moderate return, fairly passive)

Any ideas would be appreciated!

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Investor · Bentonville, AR · Member since 2014 · 759 posts · 379 votes
7y

@Matthew Robertson Try Boat/RV Storage. Can start with open parking to test it or just covered storage. Easy way to try that first. That can be pretty passive.

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  • Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    7y

    Have you offered it as owner financed to a potential buyer? It may be easier to sell that way.

    Sounds like your other ideas could work. Storage would require rooftops. You can get Mobile homes cheap and set them up as owner financed but as you mentioned there will be a cost associated with that as well.

  • Rehabber · Nashville, TN · Member since 2013 · 16 posts · 5 votes
    7y

    Hey @Greg Dickerson, yes I have offered owner financing and even lease/purchase options.

  • Rental Property Investor · Holley, NY · Member since 2011 · 507 posts · 347 votes
    7y

    Before you or anybody can answer this question well, look into the zoning regulations for the property.  Self storage and mobile homes are possibilities, but if the zoning as it stands now doesn't allow those uses, you have an uphill battle already.

    The first thought (after checking allowable uses) that comes to my mind would be to look at creative ways to get the most out of the existing building.  With 8' doors, the open space is somewhat limited, but could be used for motorcyle and/or boat storage in the winter, or perhaps classic cars.  Depending on how the space is configured, you will likely get 4-5 cars max. in there.  Per square foot, you might find you get more by targeting motorcycles. 

    You might also look at a storage conversion to the open space to make the existing building a self storage to test the water.  You already have walls and a roof and I assume a floor slab, use that space before adding more buildings.

    Is there a way to rent out small single offices instead of the whole office to one user?

    Just a couple of thoughts.

  • Investor · Bentonville, AR · Member since 2014 · 759 posts · 379 votes
    7y

    @Matthew Robertson Try Boat/RV Storage. Can start with open parking to test it or just covered storage. Easy way to try that first. That can be pretty passive.

  • Rehabber · Nashville, TN · Member since 2013 · 16 posts · 5 votes
    7y

    Thanks @Zach Quick!

  • Joel OwensBusiness Member
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    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    7y

    Some attorneys, chiropractors,dentists,  landscape companies, etc. come to mind. Have to check as mentioned to see what is possible with zoning.

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