Hybrid Multifamily & Commercial Unit

[Jennifer Stein]

Hello All...I am new to this community and also fairly new to multifamily investing. I have a full time job, so I am dabbling into the multifamily real estate syndication market here in LA, SF and NYC. I have only invested in about 3 different properties so far (ad value, multifamily units). However, there is a new investment property in LA that is a hybrid 4 Apartment Unit plus 1 Commercial Unit that is currently a restaurant that is paying below market rates. This is an ad value investment opportunity. Typically this company repositions multifamily apartment complexes in the LA area (West Adams & Inglewood) that is an ad value opportunity. This time it's still an "ad value", however, the new element is this commercial unit attached, and two of the 4 apartments will be delivered vacant. I am not sure how to research this type of hybrid opportunity- is it more risky, less risky to have a commercial unit attached? Does anyone know what the cons are to have a commercial unit/restaurant attached to these multifamily units? Would love any feedback, or any articles/key words I should use to research this better....Thanks very much all!

[Geoff Antone]

Hi Jennifer,

The question is how reliable is the tenant leasing the restaurant space in the building? Are they a national tenant ? How much time is remaining in the lease?

What condition are the unoccupied units in? If there is work to be done on the units how much investment will be needed to pull ad value from the property?

Those are questions you want to ask yourself while considering the property. Reference this BP article https://www.biggerpockets.com/renewsblog/2008/10/0...

The area you are looking into is a hot one. Inglewood has great properties with upside.