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Updated about 5 years ago on . Most recent reply
How to Analyze Small Mixed Use Properties?
I am currently house hacking a SF Condo and am just starting to analyze deals for the next one. I am looking into small multifamily (under 4 unit) properties and found that many of them within my price range have commercial space. I have no experience with valuing or comping commercial spaces or commercial leases and want to learn more so I can include this large subset of properties in my search.
Does anyone have a good rule of thumb or resource to point me towards where I could, with some accuracy, learn to value potential income on the commercial part of a mixed use property?
Further, if anyone can suggest any resources for learning about mixed use or commercial spaces and leases, that would be a great help!
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#2 Land & New Construction Contributor
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Originally posted by @Anthony Del Russo:
I am currently house hacking a SF Condo and am just starting to analyze deals for the next one. I am looking into small multifamily (under 4 unit) properties and found that many of them within my price range have commercial space. I have no experience with valuing or comping commercial spaces or commercial leases and want to learn more so I can include this large subset of properties in my search.
Does anyone have a good rule of thumb or resource to point me towards where I could, with some accuracy, learn to value potential income on the commercial part of a mixed use property?
Further, if anyone can suggest any resources for learning about mixed use or commercial spaces and leases, that would be a great help!
It’s the same as any other property. You need to look at the comps in the area for demand and lease rates. Best thing to do is talk to some commercial property managers and brokers in the areas you are looking at to get a good view of the market. One big consideration for commercial space is tenant improvement allowance and free rent period when the space turns over after it is vacant. The more demand there is for the space the less you have to offer. The less demand the more you have to offer.