Commercial Mixed Use - Tenant Search - Hot Pink Hair Salon

[Alex Capozzolo]

Hi BP, my partner @Jon Sanborn and I recently bought a commercial mixed use property in Philadelphia, PA 19132: 3 Total Units - 2 Bedroom Unit, 1 Barber Shop Unit, 1 Hair Salon Unit. The tenants we inherited are great, but the Salon Shop was on a month to month lease, and after 15 years of running her business she’s planning on retiring in January.

This is our first experience with Commercial Tenants, and we’re curious what people would suggest for our next move for this unit?

The Salon tenant is planning on selling her Salon Business, which includes the database of clients and salon equipment (6 hairdryers, 10 salon chairs). The previous owner charged $1000/mo in rent for this Salon Unit, and had the tenants pay for Electric.

Plans we’ve considered:

• Searching high/low for another Salon tenant who will buy our current tenant’s business outright and run their own Salon from our unit. Ideally, we would find someone who is currently running their own Salon business, but needs to upgrade to a larger unit like ours. More realistically/likely, we think it’d be a hair stylist that is looking to start up their own business.

• Buy the tenant’s equipment ourselves, and rent out the Salon Chairs individually ourselves to individual Hair Stylists. This route sounds less passive, but could have a profitable upside.
  • Would we need a hair styling license to rent out the individual salon chairs weekly/monthly, even if the hair stylists have licenses? And does anyone have experience doing anything like this?

• Buy tenant’s equipment ourselves to then resell, which we estimate is worth around $3K between the used salon chairs and hairdryers. Then with the unit emptier, we would search for another different type of Commercial Tenant.

Any advice is appreciated!! Thanks