Commercial/Residential Combo Investment

[goofiefoot]

We have been considering purchasing rental property (short- or long-term) in a coastal town not too far away.  In our search we've come across a couple of options that combine commercial and residential properties. 

One case is a downtown retail shop with warehouse space and a nice 2/2 residence attached.  The residence is updated, faces the water, and seems uninterrupted by the business side, which may be a cool little VRBO-type rental opportunity.  The retail space is 600sqft and the warehouse is 1200sqft, so there are some interesting options for potential businesses.  The downtown area is on the water, seems to hold businesses, and is close to other activities, so both the commercial and residential aspect has a lot of potential draw. 

We currently own two single-family rental homes near our residence, so we are familiar with the landlording lifestyle.  I'd be interested to hear from folks who may own similar properties, or who own commercial property that may be able to share their insight.  Thanks!

[SBuck]

Sounds like a great mixed use property. Do you intend to occupy any portion of it? I'm curious are all the units occupied with renters with lease agreements? What do you consider short term to be?

[Blindsquirrel]

   all depends on the rents and price/cost to maintain etc. Sounds neat though.

[goofiefoot]

Sounds like a great mixed use property. Do you intend to occupy any portion of it? I'm curious are all the units occupied with renters with lease agreements? What do you consider short term to be?

I'm in the process of finding a realtor there, and I need to find out more.  I don't plan on personally occupying the retail or warehouse space, but we might stay in the residence if unoccupied when we visit. 

The listing shows a retail business in the space currently, but I'm not sure whether that lease continues with the new owner.  The warehouse space is unoccupied.  The residence looks to be lived in.  I'd love to buy it with leases already in place.  If the residence is not under lease, I thought it would be nice for short-term or seasonal rental.  Here in Texas, the coast is nice all year round, so renting out of a few nights to a few weeks at a time can net a regular, reasonable income if it's priced right.

[waltworks]

The question is really cost and rental rates. Commercial can be harder to get a loan on in some cases (not sure what would happen here with mixed use) but otherwise, it's a similar numbers game. What will you get coming in, what will you spend?

I'd walk into the business and ask what their rent is (most people will just tell you upfront). Then walk around back (front?) and knock on the door there (or scan AirBnB/VRBO and see if it's listed). That will give you some basic understanding of what's what. Call your insurance person and ask them what it would cost to insure. Look up the property taxes, etc, etc.

-W