In response to my post of May 6, Trump University Member 8230 posed a question that will interest all our members:
“Three years ago I decided to expand a small one-room business into a four-room Day Spa in the No. VA area. I spent my own money with not much wiggle room financially. I have seven employees. Next door to the building my spa is located it in is a larger building with 11 rooms for sale. I want to own a building that my business can be located in and it's in the same town that is important to be in. I believe that this opportunity will pass me by because I do not have the capital to purchase this property. I know that I could apply for a loan, but . . . I believe that I would not be approved. Are there other options or ideas? I really want this, I can see it, feel it, I've already mentally renovated the place. I just don't have the financial means. I would appreciate any suggestions. . . .”
Member 8230 is asking a great question that opens up a lot of interesting topics for discussion. Because the fact is, multi-unit properties (be they apartment buildings, office buildings or mixed-use properties) offer many more ways to structure purchases than do one-family homes.
Here are some ideas for Member 8230 to consider. They’re only the tip of the iceberg, illustrating a few of the strategies that wise investors use to make money from multi-unit buildings, even when they doubt they have the financial resources to purchase them:
Find out whether the seller would like to get some continued use from the building. Would he or she like to have some of the space in the building, rent-free, in exchange for letting you purchase the property with no money down? Be flexible and be willing to offer concessions up to the point where they make financial sense for you. Work the numbers. The place to start is to determine what commercial space is renting for per square foot in your area. That's the benchmark. It tells you the dollar value on what you are offering the seller as a negotiating chip.
Consider different ways to configure the building for mixed use. Does local zoning allow you to convert the bottom floor into a store or an office? How about converting the property into a residential or office condominium with a store you rent out on the bottom floor? Multiple-unit means multiple opportunities. You just have to use your imagination and see all the configurations that exist in the building you are considering.
Use every part of the property to generate income. How about renting out parking spaces or storage area in the basement? Think like that legendary Eskimo who caught a seal and used every single part of it to advantage, without throwing any part of it away? With imagination, you can wring income from virtually every part of many multi-units.
Yes, there is gold to be found in multi-unit properties. With the right knowledge, could they be your path to real estate riches?
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