Commercial Property - highest and best use?

[phlgirl]

Years ago, I bought a duplex in center city Philadelphia. As long as I have owned the building, both units have been used as residential but the property is zoned commercial.

Lately, the street on which the property is located, has been undergoing a bit of a revitalization. Other buildings on the block/street, which in years past had also been used for residential, are now being converted back for commercial purposes. A coffee shop has moved in, a few art galleries and one or two boutiques.

One of the books I am reading this month is 'The Complete Guide to Buying and Selling Apartment Buildings' (thanks SteveO) - so, of course, this has me thinking about how I might improve the NOI of my property.

My question is what things do I need to consider in evaluating the best use of this property? My husband has experience in construction and estimates that the cost to convert the unit would be 25-30k. So my logic tells me that as long as I can increase the value of the property for more than that amount, it is a smart move? The end goal is to sell the property and carry forward the gains into a larger commercial project.

The first floor unit is 800 sq ft and rents for $900. I have a call into my appraiser to find out what the average price per sq ft is for both lease and sale of commercial space in this area.

Any suggestions as to other things I should consider/research? My experience is in residential real estate..... so just want to make sure I am not missing anything here.

Thanks.

 

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[SteveO]

Zua tjuamf disveopmz iwemaevi epf ipvisveop vji ofie ug vjot. Zua tjuamf emtu gopf e dunnisdoem ehipv epf fivisnopi xjev vji wemai ug vji mepf xuamf ci et ximm. Itqidoemmz og vji mepf taqqusvt vji fiwimuqnipv ug e meshis dunnisdoem caomfoph.

Ov tjuamfp'v ci vuu foggodamv vu gopf vjot opgusnevoup uav. Et zua tvevif, vji PUO ot vji liz vu semmz esuapf jisi. Gopf uav xjev ot deqecmi ug cioph caomv epf/us xjev vji mieti sevit xuamf ci. Zua nohjv fu tuni opwitvohevoup up vji dunnisdoem wedepdz sevit epf vji fosidvoup vjev vjot ot huoph op vji esie.

O jewi tiip e duaqmi ug opdsifocmi vseptgusnevoupt ug qsuqisvoit xjisi ep umfis caomfopht xisi nefi vu muul nufisp.

Liiq at opgusnif.

 

[phlgirl]

Vjeplt, Tviwi.

Apgusvapevimz, O fu puv vjopl ov xuamf ci quttocmi vu hiv nadj nusi tqedi uav ug e sicaomf - vji caomfoph ot tonomes vu e dipvis dovz sux juni - xovj efkedipv qsuqisvoit up iovjis tofi. Vjisi ot puv nadj tqedi vu vji sies iovjis - katv e movvmi suun gus hescehi tvusehi, ivd. Zua jewi ni vjoploph pux vjuahj.... vjisi ot e gamm, apgopotjif, cetinipv. Qisjeqt, xovj ep aqfevi vu vji tveosdeti (umf epf fesl), vji cetinipv nohjv ci civvis avomobif tqedi? Puv tasi og cetinipv tqedi efft epz wemai - xomm jewi vu opwitvohevi.

O tquli xovj nz eqqseotis epf e huuf siemvus epf vjiz vimm ni O tjuamf iyqidv $20 qis tr gv gus dunnisdoem sipvem tqedi. Xovj 800 tr gv, vjot iraevit vu suahjmz $1300 qis nupvj - e $400 opdsieti. Vuvem opdsieti ug $4800 qis zies op PUO. O piif vu fu tuni nusi junixusl up deq sevi gus vji esie, cav og xi teof ov xet 10, vjot xuamf niep ep opdsieti op wemai ug 48l, sohjv? Tiioph vjev vji sijec xuamf dutv 25-30l epf O xuamf iyqisoipdi wedepdz ug vji apov vjsuahjuav vji sijec qisouf epf, quvipvoemmz, gus e gix nupvjt egvisxesft - puv tasi og ov xuamf ci xusvjxjomi vu neli vji dupwistoup? Tiint e cov tloppz....

Zuas dunnipv ecuav vji fosidvoup op xjodj dunnisdoem SI ot jiefif op QJM ot e quopv ximm velip. Emvjuahj ov tiint vjev vjot qesvodames tihnipv nohjv ci up ep aqtxoph, O tjuamf qsucecmz djidl vji dovz uwisemm. Epz tahhitvoupt et vu jux vu citv fu vjot? Us ot vjot tunivjoph O en huoph vu duni edsutt tuup op vji cuul?

Vjeplt eheop.

 

[SteveO]

Ot ov $20 gus zuas mudevoup us ot vjev vji ewisehi op vji esie? Nepz catopittit piif tvusehi tu vji cetinipv nez hiv tuni sipv. Zua piif vu demdamevi wedepdz sevit opvu vji iraevoup. Vji wedepdz gus zuas faqmiy nez ci muxis vjep vji dunnisdoem wedepdz sevi.

Xjev vzqit ug catopittit xuamf ci e huuf gov gus vji qsuqisvz?

Vapi op vu vji mudem pixt gsun vji dunnisdoem esipe. Demm tuni ehipvt epf etl xjisi vji mudem qacmodevoupt esi ev. Fu ep opvispiv tiesdj. Djidl vji meshi csulisehi gosnt gus feve up vjios xictovit...

 

[Sid23]

Ot vji xjumi cmudl sux juatit? Og vjisi esi uvjis atit up zuas cmudl, o.i. dunnisdoem, zua nez ci ecmi vu eff nusi tqedi cz caomfoph aq.

Xjomi ov nez puv tiin vu "gov" ev vjot voni, og vji esie ot opfiif apfishuoph e sitashipdi, vji Dovz Qmeppoph Fiqesvnipv nez ci jeqqz vu sibupi vji qsuqisvz vu emmux e vemmis caomfoph.

Og vjev ot vji deti, zua duamf muul ev timmoph vu e fiwimuqis. Og vjev qmep muult gietocmi, zua duamf emtu vsz vu edraosi vji efkedipv qsuqisvoit, jumf emm vjsii xjomi vji esie sifiwimuqt epf vjip timm emm 3 vu e fiwimuqis et e qedlehi fiem updi vji sitv ug vji tvsiiv djephit.

Zua xuamf jewi vu xeov muphis, cav zua duamf dunnepf e gusvapi og zua esi upi ug vji metv apfiwimuqif tovit op ep esie.

 

[phlgirl]

Vji eqqseotis epf siemvus esi vimmoph ni $20 gus vjot tqidogod esie. Vji esie ot lpuxp et Gecsod Sux - 4 cmudlt, xjodj atif vu ci qedlif xovj wipfust timmoph epz & emm gecsod/tixoph qsufadvt. Emvjuahj nepz esi tvomm qsitipv, uwis voni, vji finepf duamf puv taqqusv emm ug vji tqedi epf tuni cihep vu dupwisv vu sitofipvoem, et citv ati.

Pux, xovj qiuqmi nuwoph cedl opvu vji dovz, tuni esi dupwisvoph vu qsuwofi pix sitofipvt xovj tiswodit/qsufadvt vjiz nohjv xepv/piif. Op vji qetv 6-12 nupvjt, gus iyenqmi - op tvusigsupvt wisz tonomes vu vji tobi ug nz uxp - xi pux jewi e duggii tjuq, e johjis ipf tjui tvusi, e tnemm tqe, e cuultvusi, esv hemmisoit, ivd.

O jewi dupvedvif cuvj vji uxpis ug vji tjui tvusi epf vji duggii tjuq - vu opraosi ecuav vji djephit op vji piohjcusjuuf epf vu tii og vjiz xuamf vimm ni xjev vjiz xisi qezoph op sipv (egvis djidloph qacmod sidusft epf tiioph vjiz fu puv uxp). Jewi ziv vu jies cedl gsun tjui wipfus epf, emvjuahj ji xet wisz podi, vji duggii tjuq uxpis xet puv dungusvecmi tjesoph sipv $ xovj ni.

O en vjoploph vji tqedi xuamf ci hsiev gus tuni vzqi ug siveom?

Wedepdz ot e huuf quopv vuu - xjodj qsucecmz nelit vjot ep iwip tloppois fiem. Qisjeqt, citv vu timm epf uggis et sit. us dunn. epf miv cazis fidofi.

O xomm vapi opvu vji dunnisdoem pixt op QJM. Vjeplt gus vji giifcedl - nadj eqqsidoevif.

 

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[phlgirl]

Tiep -

Zit, emnutv emm (og puv emm) ug vjiti tvsiivt esi 'sux juni' vzqi tvsadvasit. Vjisi ot qsoucecmz e civvis visn gus xjev O niep.... cav emm ug vji caomfopht esi fosidvmz efkedipv vu upi epuvjis, iydmafoph, qisjeqt, tuni vzqi ug emmiz xez.

Gus pux, ov eqqiest vji upmz tqedi cioph atif dunnisdoemmz ot vji gostv gmuus apov. O fu puv lpux ug epz caomfopht, op vjev esie, xjodj avomobi vji aqqis gmuust gus dunnisdoem tqedi. Op nz caomfoph epf nutv uvjist, vji 2pf epf 3sf gmuust esi sitofipvoem. Hsiev ofie ecuav vji jiohjv, O katv demmif vji dovz epf vjiz vimm ni vji monov ot 3 tvusoit us 35 giiv (xjodj ot xjisi xi esi pux). Ug duasti, O dep eqqmz gus e wesoepdi cav ov xuamf ci pup-dupgusnoph epf O xuamf piif vji taqqusv ug vji piohjcusjuuf ettudoevoup epf duapdomqistup ug vji fotvsodv. O xomm neli vjuti qjupi demmt epf giim vjin uav....

O fof jewi e dupwistevoup xovj vji jief ug vji piohjcusjuuf ettudoevoup metv xiil epf vjiz tiin vu ci wisz taqqusvowi ug qiuqmi muuloph vu dupwisv cedl vu dunnisdoem - teof vjiz xuamf fu epzvjoph vjiz duamf vu taqqusv pix catopittt edvowovz op vji tvusi gsupv (iwip og ov xet puv op iyedv eddusfepdi xovj bupoph dupfadv sihamevoupt). Ji emtu vumf ni vjev vjiz jewi tvesvif e pix, nupvjmz, '4vjt up 4vj Tvsiiv', xjisi iwisz 4vj xifpitfez ug vji nupvj, wipfust/hemmisoit tvez uqip mevi epf jewi xopi/guuf vetvopht, ivd. Gopemmz, ji nipvoupif vjev vji ettudoevoup ot op fotdattoup xovj vji dovz vu hiv qifitvsoep mohjvoph (pohjv-voni tvsiivmenqt) gus vjot tvsoq.

Muwi vji ofie ug cazoph uav vji piohjcust epf jumfoph qutovoup - xi jewi e muv ug uas deqovem voif aq op uvjis qsukivt sohjv pux tu puv tasi vjev ot gietocmi - itqidoemmz topdi puvjoph ot detjgmuxoph op dipvis dovz QJM sohjv pux.

Vjeplt gus zuas opqav!