Wholesaling Commercial/Residential properties - Posted by David C. Cooper

Posted by Natalie-VA on June 27, 2007 at 09:16:24:

Hi David,

My experience is only in residential, but I would look at this one from an income approach and work it backward. Put yourself in the investor’s shoes and figure out all of the monthly income and expenses including professional property management. Remember that professional property management on a seasonal rental is going to be more intensive and expensive.

Next, figure out how much cashflow you want on top of that and the number left should show you how much you will need to finance and/or put down on the property.

I would also take into account a discount if the property is vacant and needs repairs.


Wholesaling Commercial/Residential properties - Posted by David C. Cooper

Posted by David C. Cooper on June 24, 2007 at 14:27:15:

I recently came across a commercial/residential building FSBO for $400k. It has frontage on the major highway (highway 101) and sits directly across from the local marina with great views of the harbor, lighthouse, etc. The building is in great shape with about 1600 sq ft of retail space; about 1200 sq ft of residential downstairs and 1500sq ft of residential upstairs that are used as vacation rentals.

The business currently occupying the downstairs space will be vacating and current rental rates for commercial propery here runs $0.70-$1.10/sq ft.

There is also a 30’ easement along the rear of the property that hasn’t been used in years and another lot across the easement that the county is trying to sell.

What are the differences between wholesaling commercial and residential properties?

How would I determine ARV?

How would I determine my max purchase price? (the same ARV*.7-repairs formula used for residential or?)

What other costs do I need to anticipate besides the normal expenses connected to residential RE?

What kind of due diligence will I need or my wholesale buyers expect to properly structure this deal?

Any ideas or suggestions are appreciated.

Re: Wholesaling Commercial/Residential properties - Posted by Pete-NC

Posted by Pete-NC on June 28, 2007 at 17:40:54:

If this property can generate $3,500/mo or about 40k a year net it’s a good deal. The commercial gives you about 1500 so you need to get 2000 out of the residential after any type of management fees. If you can figure that out you could have a good deal on your hands. Of course if the commerical tenant can handle the residential piece that helps with the fee part. Don’t forget to figure taxes into the equation