Commercial/recidential Property
I found a commercial/residential property on a main street in my neighborhood in NJ. It is a plot, size is 45.50' * 160', can build a 3 story building, first floor for office to a professional, 2nd and 3rd for apartment rentals or additional offices. It is for sale by owner who is asking for $225K. He told me a doctor will buy it for $800K if he will build the 3 floor buliding, but he does not have the time.
I have not been able to ask the owner many questions, since I am new to this industry, not sure what I am supposed to ask. I am not familiar with commercial property. I am thinking to find a builder to flip it to if I can work it out, what should I do next?
! ) What questions I should ask the owner?
2) What information should I get about the property?
3) How can I find out the commercial/ricidential land's market value?
4) What else should I find out and do?
a build to suit (for the doctor) is a developers dream
forthe own:
why is he selling
what are current rent
vacancy
etc.
Verify zoning and planning regulation that you can dowhat you think you can. (e.g. is a medical practice allowed there)
what are the set backs & parking requirements
what's the FAR (floor area ratio)
Assuming 10' set backs and being able to build 3570 sq. check the cost of building. Here is CA w/ Tenant improvements (TI) your talking 175-200/sq sft.
even at 100/sq your' talking 357K in construction costs.
that leaves 200K for permits, architect, builders profit, your profit, etc.
As for comp find a commercial realtor in the area.
being new to the industry, biting off a commercial project is big.
My advice is to get the property under contract with a long mortgage contingency. Then start "working the deal": Talk to the doctor to make sure he's real and not a figment of the sellers www.imagination.Talk to 10 more potential end users/iinvestors for the back end take out. Find a builder to go partners and build the building. Talk to bankers about getting a loan.
A development project is like a big jigsaw puzzle. Each piece of the puzzle that you get into place adds value. The closer you move this to moving tenants in and collecting rent the easier it is for someone else to see the rest of the way to the end and therefore the more they will pay.