Commercial real estate investors looking to expand their portfolio must consider purchasing vacant hotels or malls. These properties often allow you to convert buildings into multi-family rental units, giving you a substantial source of income. As you research your purchase, ask yourself these questions.
Where Should I Invest?
This is more than just the adage, “Location, location, location.” Try to make your first real estate investment in your local community. Successful real estate investor Angelo Ingrassia focuses on investing in buildings in and around Rochester, New York. Neighbors respect your commitment to the community in which you invest. You also understand the types of offerings that the area can support.
What Are the Zoning Requirements?
Once you have identified a property, contact the local municipality’s planning and zoning department. The governmental body mandates how properties may be used. They also stipulate if a building is considered historical. Designated historical properties often have strict building requirements that you must follow. Learn how new zoning ordinances impact the property. When the property changes hands, you must adhere to the new regulations. Don’t be discouraged. You can petition the planning and zoning department to amend or change stipulations if the changes will benefit the community.
Are There Comparable Properties?
Find a local real estate appraiser that can help you find comparable properties. While you may not be able to find another building that matches your exact situation, appraisers can often find properties similar to yours and give you comparable pricing. An appraisal report usually includes:
- Ownership history
- Market trends
- Property size
- Unique features
Will the Final Product Be Interesting?
Most real estate investors specialize in retail or residential properties based on their interests. Make sure the property you are investing in meets your long-term goals. Take an objective look at the property and how it aligns with your interests. You may find a facility that can be restored into small retail stores, but your interest is in multi-family rentals.
Does Demolition Make Sense?
Take a comprehensive look at the property. Prepare a comparison showing the potential cost of repairing versus renovating the buildings. In addition, zoning regulations may require that you maintain and improve the exterior of the building. Ask a professional to evaluate the structural integrity of the building. Older buildings may not adhere to Americans with Disabilities Act codes. Estimate the cost to update the property and structures to ensure they comply with the Americans with Disabilities Act requirements, especially ADA Standards for Accessible Design.
What Features Attract Customers?
One of the best parts of renovating older properties is to take advantage of the designs integrated into the design of the building. These designs become sales features to help your building stand out. Some features include:
- Tall ceilings found in old office buildings are in high demand from residential renters
- Large parking areas give tenants access to personal parking spaces
- Reception areas can be developed as attractive entryways
- Indoor swimming pools in old hotels are sought-after features in apartment buildings
- Hotel kitchen areas can be modified into community rooms, media centers, or gyms
What Does My Professional Team Recommend?
Before you make a final decision, speak with your team of professionals – contractor, engineer, attorney, commercial mortgage broker, and real estate agent. They focus on helping you understand the advantages and disadvantages of the property. Be sure to take the time to ask them questions and listen to their responses. They will help you make the best decision for your investment.
Proper planning helps you build a dynamic real estate investment portfolio. Investing in existing buildings and repurposing them to fit a new customer base is a great way to help you make money.