How to Fix Up Commercial Properties

nospam@example.com (Terri Henry - Contributor) — Wed, 09 Jun 2010 09:10:00 -0500

Are commercial fixer-uppers worth the time, expense and effort? My answer to that would be that the right fixer-upper with numbers that make sense can be the right strategy to use. In fact, these types of properties can be an easy way to see an instant value increase in the property but like with any deal, only if the costs to rehab the property make sense.

Commercial fixer-uppers employ one of my favorite value plays called "repositioning". That means that either the tenant base changes, the appearance of the property changes or that both of these options are exercised on the properties.

In residential real estate investments, the idea of investing in a fixer-upper is to acquire the property at a significant discount due its condition. In commercial property, the same still holds true but in commercial properties can account for greater cash-on-cash returns. Perhaps you've found a property that needs some cosmetic care. Maybe the exterior needs to be updated with a new look. You'll be amazed at how a small investment can net a high return in value.

Apartment buildings can be a great opportunity for repositioning. In strategies like these, the first thing I usually change is the exterior paying special attention to the parking lot, roofing and sidings. I do other simple things like updating the landscaping and putting new signage on the property which are quick ways to give a new appearance to an older building.

I might also consider repositioning the tenant base with this same apartment building. I'll replace tenants who don't pay or don't fit the target tenant profile with ones that do. This may take months to accomplish, but the increase in value can put the worth of the property through the roof.

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Caribbean Living Lifestyle Blog - Commercial Properties

How to Fix Up Commercial Properties