Advise On Wholesaling A Commercial Property
Hi. I am a newbie real estate investor. I am hoping for advice on what to do.
The owner of a commerical property is willing to let me wholesale it. The neighborhood is being redeveloped and the market there is very good. The property is a bit run down. It has 4 commercial tenets and 10 residental tenets. It sits on a corner. The rents are pretty low. The owner is looking for about $600,000 for it. I think there is a lot of potential here given the location.
My thought is to find a buyer like a commercial real estate developer and sell to them. (I would think that they would tear it down and rebuild something bigger and better. There are 3-4 well known companies in the area who are active in the redevelopment of this part of town. Is this the best strategy?
(I also do not yet have the contract signed with the seller yet. I don't think that is a problem here. He is very flexible, because he personally is thinking about marketing it as a rental and is working on the numbers. I obviously could be very wrong here.)
Any useful advise would be appreciated.
Thanks.
- Charlie[ Edited by CharlieG123 on Date 02/11/2004 ]
Charlie,
I would first confirm with the municipality what uses the current zoning permits for that property as well as provisions relating to leasable SF, building coverage--anything which points to how the property could be built out for commercial use (if that's what the zoning is).
Then you have some benchmark for choosing between potential buyer (flippee) markets and something to work with to put a value on the land and also evaluate the seller's price of $600K. You'll want to determine what the market rents should be for the existing tenants.