All Forum Posts by: Robin Evans

Quote from @Evan Polaski:

@Robin Evans, you are looking at this all as 3 separate things, but it isn't.  You have have a bottleneck in your current property due to parking.  Potential #1 releases that bottleneck.  So even though, as a stand alone property it may not be better, what are the overall numbers combined by owning both.

Potential 2, is better standalone property, but you remain bottlenecked in current property, so, again what's your overall return.

Then, what is the path of development?  Are you positioning yourself in that path?  If so, having adjoining properties is always beneficial, since bigger is almost always more economical to develop.  

Lastly, back to risks of potential #1, what is the use?  How long have they been there?  What are their sales?  Are they the current owner?  Retail is a very susceptible business, especially if we are going into another recession.  Necessity based uses will always be insulated, but discretionary spending has been dropping already.  I would assess that risk as well, given you are concerned that the property may not be terribly viable as it sits, let alone vacant for 3-4 years, or at lower rents then current.

@Evan Polaski thank you! #1 is not there super long (a couple of years) and all the associates are volunteers. So they are not that profit driven.  If we rent our current vacant unit to a single family, our current parking lot would be sufficient. The cash flow would be less though but we would not be having the parking issue. 
The small town is currently expanding. More new homes are being built just outside town and the government is trying to boost the downtown business. We are seeing a positive uptake in the area. All three properties are downtown.
Then my question is if we buy #2 and the two stores can not be leased out due to recession or other reasons, is it allowed to use it as a residential unit? 

Quote from @Steven Foster Wilson:

Quote from @Robin Evans:

Hi dear BP friends we are new to commercial real estate investment and would like to ask for your input on these two potential investment properties. We have already bought a mixed use commercial property that has a store on the front and three residential units on the back in a small town. There is a parking lot on the back that can potentially fit 8 cars if tenants park as instructed. But we need more parking space because we are thinking renting out one big unit by room so will need more parking space. The rent of the whole property might be doubled if we rent out all 5 rooms. Currently it is being rehabed. There is also street parking option, but not that convenient.  

# 1 potential property is next to us (also a commercial lot currently rent as a retail store) and will be for sale soon. If we buy it, we can have more parking space for use for both properties, mainly at night time bc # 1 property uses the parking lot mainly in the daytime.  The rent is not that high (not even hitting 1%),  and is less likely to increase within a short time. It may not even cash flow if rent is not raised. 
# 2 potential property is a few blocks away, also mixed use, stores and residential units currently all rented out. Rent is much higher (can hit 1.4%) and will cash flow a lot more than # 1. 

We can only buy one with our current fund. Which one makes more sense? We appreciate any input and creative ideas! Thank you!

 How long is the lease on #1? Could you potentially raise the rents like stated or get someone else in there that could rent for more? If there is more potential for that then I would go with #1 but if not then #2. At the end of the day it is a business and you have to go off of the numbers. 

@Steve Wilson thank you! Not sure on the lease term yet. Might be month to month. It will be a tough position for us to raise the rent or get rid of the charity store due to the purpose of the store, don't feel ethical to do that.  Meanwhile, running business needs to make money at the end of the day. #2 does have more potentials. One tenant is being evicted so might need a rehab after the eviction. Not sure on that yet. 

Quote from @Ronald Rohde:

I'd take the adjacent. Id wager your rents can go higher than your assumptions on #2.

@Ronald Rohde thank you! Actually #1 is currently rented to a nonprofit organization store at $450 per month and seller is going to ask for $80k for the property. Kind of hard to raise the rent substantially to get decent cash flow with the current tenant. 

Quote from @Account Closed:

I would do option #1. The value of two adjacent properties will be higher than the sum of the individual ones. In your case, the market value and cash flows from your mixed used property will likely be higher if you own the adjacent property. In addition, money you would invest in one of the properties will likely increase the value of the second one, as well. And vise versa. Faced improvements can be made to complement one another and would have a big impact.  

@Blase P thank you! The adjacent place looks actually better than our front store now, has more room too. 

Quote from @Jason Norton:

I would go with #2. We have a returning client who has store front, storage in back and a rental upstairs and it seems to be a very good investment. Gets a good ROI.

@Jason Norton thank you for your input! The one building we just bought has similar layout, store front, storage in back and an efficiency in the middle. We wanted to convert the storage into multiple smaller storages facility, but the city doesn't allow it because it is closer to downtown area. Now we are thinking dividing it into several spaces and rent to our own tenants. So it's not an official storage facility. Otherwise, it will just be unused. 

Hi dear BP friends we are new to commercial real estate investment and would like to ask for your input on these two potential investment properties. We have already bought a mixed use commercial property that has a store on the front and three residential units on the back in a small town. There is a parking lot on the back that can potentially fit 8 cars if tenants park as instructed. But we need more parking space because we are thinking renting out one big unit by room so will need more parking space. The rent of the whole property might be doubled if we rent out all 5 rooms. Currently it is being rehabed. There is also street parking option, but not that convenient.  

# 1 potential property is next to us (also a commercial lot currently rent as a retail store) and will be for sale soon. If we buy it, we can have more parking space for use for both properties, mainly at night time bc # 1 property uses the parking lot mainly in the daytime.  The rent is not that high (not even hitting 1%),  and is less likely to increase within a short time. It may not even cash flow if rent is not raised. 
# 2 potential property is a few blocks away, also mixed use, stores and residential units currently all rented out. Rent is much higher (can hit 1.4%) and will cash flow a lot more than # 1. 

We can only buy one with our current fund. Which one makes more sense? We appreciate any input and creative ideas! Thank you!

 @JD Martin  @H. Jack Miller @Henry T.   Ohio is indeed very landlord freindly!Thank you so much for all the replies! Very helpful!  It will be just so easy to have our own tenants instead of inheriting tenants, lol. A technical question for the one-year lease tenant (might sound silly). We will resign the lease with the old provisions. Do we just white out the previous landlord info and signature and put our info and sign on it and date it with current date? Lease might look a bit odd...

@JD Martin thank you very much for your detailed reply! It is very helpful! More questions to follow up: 1. Do you charge a bit higher rent if tenants go M2M?  

2. If we terminate this M2M tenant, do we just need to give her a 30-day notice? Her rate is below market and she refused to move her car when we asked her to move it to a different spot, giving us another reason to end the tenancy, lol. 

3. What about terminating the one-year lease tenant? Also 30-day notice? 

4. One unit of this property is a commercial store. We need to sign a new lease with the tenant. Do you have any commercial lease template or any recommendations of attorneys? 

Thank you! Really appreciate your input! 

Hi BP friends we just closed on a 4-unit mixed use property (super excited!)and inherited three units' tenants. One tenant's one-year lease is up but a new lease is not signed previously so she is on month to month now. But there is nothing mentioned in lease on where to park other than 2 cars are allowed for her. Our questions: 1. Can we sign a new lease with her now? If we can, do we have to honor all the provisions in the old lease?  2. Can we add parking rules that we are going to designate a specific parking spot to each tenant? 3. For the one-year lease tenant, do we need to resign a lease with her with old provisions?  Or can we sign a new lease with our own provisions?  Thank you in advance for any input!