Want To Build A New Small Commercial Strip Building
I need some help in mapping out the necessary steps to building a small retail strip center... maybe to hold 3 or 4 retail outlets. There are a couple available plots of 2.5 to 3.5 acres for sale by a developer and then some potential available land from the local municipality. What is the best way to go about getting this financed with limited capital. I would like to hold the RE and manage it but would sell if that would be my best angle. Any input is appreciated.
Is the land currently zoned to permit the use you want?
yes, according to the village... they are looking for commercial/retail development on these pieces of land.
Juliek,
Have you done this before? Do you understand construction? Do you have any support structure available to you? Experienced Arch, Builder, Carpenter, Mortgage Broker, Real Estate Broker.
To advise you we must know a little more about your level of performance. Then we can make suggestions in a series of steps as to how to proceed.
I await your posts. Lucius
Let me synidicate it thats how. Or get some friends or investors to help with the capital. Or if you really smart find out when the entitlements, permits will be ready for buidling and neogoiate for a price before that date. Just try to buy the land. Use a longer escrow and then when the permits are ready sell flip the land as entitled for much more.
Julie
The steps to building anything are pretty much the same. Acquire the Land, develop a design, get permission to build, hire contractors.
In each of those steps there are dozens of smaller steps. But I don't think that the construction process is the question you are really asking. I think the question you really want to know the answer to is the finanincing question. "What is the best way to go about getting this financed with limited capital."
Oddly enough this is a relatively easy process for the kind of strip center you ask about. As you may be aware Lenders do not like to loan more than 70% of the value of a project (sometimes they will go 80% but read on, the process is the same). So the key is to make sure that your costs do not exceed 70% of the value.
Now in the residential biz the lending rule is 70% of value or cost whichever is lower but in the commercial biz the lenders are a little more willing to use Value as the standard rather than costs. This is because value is easier to calculate in commercial real estate and more stable.
So how do you add value? Nancy and East/West are on the right tracks, if the property is not zoned for commercial and you change the zoning that adds value. If there are no permits for a strip mall and you get permits that adds value. Each step of the way toward completing the project and collecting rents adds some value.
So what step will add enough value to get the 30% bump you need? Only one step. Find a tenant. Get a good lease with a good tenant who has put up an earnest money deposit and the lender will lend you 70% of the value of that lease. Make sure you can acquire the land and build the building for less than that and you are good to go.
BTW it is also possible to raise the 30% from investors or from government subsidies. Given that you say the village is looking for commercial development on that land they may be willing to help make it happen.
Is the project in Davis Junctionor nearby? Can't say as I recall ever having been there before. But I do get to Rockford from time to time. Maybe we should have coffee.
Thanks for your input Commercial King. IThe project was not right here but a nearby community 15-20 miles away. My original post was quite some time ago and we've made some good progress since then.
I am doing the same research, and would like to know how everything worked out for you.