Researching More Than The Numbers

[Dave Kohl]

Part of considering acquiring a property should include additional possibilities. I was recently exploring a two-story commercial building for sale on a corner in a growing downtown area. The 2-story building had a restaurant on street level and office spaces on the 2nd floor. However, a check of the zoning showed this property was zoned for up to six stories. My thinking immediately turned to researching local rental costs per square foot to determine income potential with triple the current square footage. Next, run the potential income against construction costs for adding up to four more stories to the building. If the numbers make sense, the plan is to approach the seller and attempt to get a lower price for this "2-story" building which has vacancies, since that's what the owner is selling. Keep the plans to expand the building a secret. If the numbers don't work for expanding the building, explore the potential based on the current space.