Rehab/Commercial/ Buy and Hold Analysis: What's Next in PA

[Rashad H.]

I have recently inherited a commercial property on the suburbs of Pittsburgh, Pa. ( Think DC/ Baltimore pre-gentrification circa 1990-2000). 

This is the town by the numbers:

POPULATION 16K ( Half being married )

-11 % POPULATION GROWTH SINCE 1990

AVG AGE 40

MOST ARE WORKING CLASS MEDIAN INCOME 43K

5300 HOMES OWNED

1700 HOMES RENTED

1000 HOMES VACANT

ASKING PRICES FOR HOMES: 50-75k

AVG RENT FOR 2 B1 BA: 695

Its a commercial building consists of a longstanding bar and grill my family has maintained the first level and a 4br 1bath apartment on the second floor. The building is owned outright. I will be responsible for the taxes as well as all the other expenses. 

Issues:

- I have 1000 dollars in capital and no idea where to start for financing. I was wondering if it is possible to use the equity in the building in order to get repaired. Land and building valued at 64K.

-The bar and grill is barely breaking even and the apartment is vacant.

- The Fire escape in the back needs a complete overhaul. Still waiting for feed back on the cost of repair.

- The building shares one utility line for heat eletric and gas.

I have strategies so far: 

1. Rehab the whole place and Lease the whole buillding using a property management company.

2. Rehab the apartment first which only needs cleaning and repairing the Fire Escape, Then rent it out at 725 to generate immediate cash flow. 

Im still waiting for the utility bills and looking into what type of insurance I would need. I know the taxes are 1000 a year.

Any feed back is awesome.

Thanks 

[Jerry Kisasonak]

Utilities would have to be split if you're planning on leasing the apartment unless you factor utilities into the rent and pay them yourself or shut the bar & grill down altogether.

You could lease the bar & grill and apartment as you mentioned, but there's likely a very small market for that and you may have issues locating a tenant. If you could find a lessor for the bar & grill you could grant them the rights to sub-lease the apartment with the teaser that they can offset some of their costs with the apartment rent.

If it were me I think I'd try to sell it in its as-is condition. If you can find a realtor that would market for both - that is - market simultaneously for a buyer or a tenant, you'd get the best bang for your marketing buck. If a buyer comes along, sell it. If a good qualified tenant comes along, lease it.