3 year lease (national tenant) 9% rate of return. NNN Lease (taxes, insurance, and internal expenses), but owner is responsible for roof/structure.
Up and coming neighborhood on main street. Good foot traffic. What else should I be asking here? Let me know.
Is this a cash deal?
What are you expecting to have happen in 3 years? Assume the tenant moves on, how useful is the space for another tenant?
What is the condition of the property?
Do you have prior commercial experience?
the deal
20% down
the space is about 2,500 sq feet
The block is busy but only 90% of stores are occupied
Property is in good condition
The one thing I hesitate with is that this is not a typical city block. Its a neighborhood block. There are no other national/chain stores, all mom and pop.
demographic is mostly poor black residences with a little mix of everyone else.
The neighborhood appears like its going in the right direction, but I’m just not familiar with these neighborhood urban commercial blocks.
anyone?
Can anyone speak to Urban retail real estate or at least main street usa type retail space that is mom and pop. Just want to get your feedback on these kinds of areas. Some of them are stuck in time, and others are being redeveloped. What say ye in your experience?
Is it retail? If so, I’d stay away from it. I think retail has a bad future ahead. Just my opinion though.
Yes
Yes, it’s retail. I am also considering old town USA type properties where the bottom floor is retail, and the upstairs is residential. Anyone have any experience? LMK and thanks.
[QUOTE=midlifeman;885730]Yes, it’s retail. I am also considering old town USA type properties where the bottom floor is retail, and the upstairs is residential. Anyone have any experience? LMK and thanks.[/QUOTE]
If i was an investor, this is exactly what i would be looking for. As a speculator, you missed the big pop in values for this type of property, and so did I.
[QUOTE=midlifeman;885730]Yes, it’s retail. I am also considering old town USA type properties where the bottom floor is retail, and the upstairs is residential. Anyone have any experience? LMK and thanks.[/QUOTE]
It is a specific niche. Speak with a mortgage broker to understand how easy it will be to finance a mixed use property. You need to know this before you buy so you can better understand how much capital you might tie up. You also need to know how the financing will work for a future buyer. If you sell any restrictions on financing will reduce the number of buyers and it will impact the value of the property.
I’d disregard the above post from skyavenue89. It seems to be a weak attempt to circulate a website link.
What else should I be asking here? Let me know.
This deal sounds familiar to one discussed here several months ago. I would have several concerns, e.g. the tenant’s credit rating; the remaining lease term; and why there are no other national chains in the neighborhood.
I would also take a look at the per square foot cost in relation to replacement cost. If you haven’t already, see my article The Risks and Benefits of NNN Properties.
Best of dealmaking,
ray