Potential Deal on Mixed use Property w/ Vacant lot

[Ross Carlson]

Hi Everyone,

Looking at purchasing my first property with my business partner. The property has a commercial space in front with 2 residential units located in the building.

Purchase price: $400k.

Residential Unit 1 rents for $1,250/mo. Tenant is already in place

Residential Unit 2 rents for $1,350/mo. Currently vacant

Commercial Unit Rent (comps in the area are going for $12-15 per sqft per year) approximately 500 square feet: ~$625/mo

Total Monthly rent is $3,225

The property also comes with a vacant lot that I would potentially sell off to help build reserves and fund the next property. Estimates for sale are $160k but could take some time to sell based on comps in the area.

Including property taxes, 10% Repairs, 10% Capex and 10% Vacancy, and utilities.

CoC return for this is only 4.1% which is obviously low but this doesn't factor in the potential sale of the vacant lot.

How would you look at this property especially considering it has the potential lot for sale?

Anything I should keep in mind with this being a mixed use property?

Thanks,

Ross