Help-Land With House May Produce Big Money.
I want to buy a piece of land that is along a major road with about 200,000 cars passing by the lot everyday. I wanted to run it by the board.
Here is the breakdown:
Parcel is a lot with a House and a 1/3 of an acre that is zoned for Commercial Professional.
Permit allows 2000sf of space, and currently house has about 950sf.
Utilities are in place and house would need to be gutted and rehabbed as office space.
House is in bad shape and lot is all dirt.
Would want to add another 1000sf addition.
Would need to pave the lot, add some landscaping and sidewalks. I might get away with no sidewalks and just curb.
Purchase price is 189k. Price for this area is Fair. Once project is done and additional SF is added can rent out for about $1.40 - $1.80sf or 2800 – 3600 a month.
Guy will let me buy it on a lease option with a low down while I make improvements for 6 months.
Exit strategy is Quick flip. Backup plan is to rent it out for cash flow.
What do you think are some things I should watch out for or consider?
I have only looked at buying a single family home and converting to office space twice - so I am no expert. But here in central FL, you would need site plans from an engineer that would have to be approved by the local building department. The plans are things like retention ponds for water run off, parking, and such. All mechanicals would have to be to Commercial code. Parking is huge and your site plans would tell you exactly how many spaces could be provided. There are also very large impact fees for water and sewage assessed. If you are not on city sewer and water, the commercial requirements for septic and wells were something ridiculous.
Have you called THE commercial realtor in your area and asked them about rental rates, vacancies, current listings, etc.
Be careful of commercial if you do not have experience. I get really excited about houses that are on busy roads that seemed to have near future commercial use. Some are already zoned commercial but not used as commercial. Hell I live in Orlando and the town will be commercial one day. But I call THE commercial realtor in my area and he gives me his opinon. Let's just say that I have not bought one yet.
I have never heard of flipping commercial property.
Brenda
I would recommend bulldozing the house and build a new building. In my belief and much of the corperate america, that it is better to build a new building than retrofit when the building is in such disrepair.
Also the building may be zoned commercial but the building may not be up to commercial code. In some juristictions you would be required to update it to commercial code. It is MUCH easier to just rebuild.
That being said what is the area like? Unless the area is all commercial already, I think it would be difficult at best to put an office building in the middle of a row of run down houses or such.
I don't know the situation as well as you do but would recommend doing a LOT more research. GOOD LUCK and let us know how it goes if you go through with this!
Thank you these are all great points.
It's not on a septic tank. It's in city limits near other commercial building. Across the street there is a big complex. By the way the streets in Vegas are very wide. Next door are small houses, and then on street over there is another big commercial building for offices. Across the street and over one block is a Pollo loco, and kragen with other small shops.
I talked with a contractor today and he said it may be just easier to start with a new building.
Do you think you could give a rough figure of how much a brand new building would cost? or is that way to complex?