Yes, I have been out shopping …
… last week I bought not one, but two, commercial properties:
– One is a warehouse/showroom that needs extensive renovation, and
– The other is a quadraplex (four apartments on one title/deed).
The first one (the warehouse) is one of those properties that you drive past for years and years and think to yourself: “Wouldn’t it be great to own that property … one day?”
Well, I happened to drive past ‘one day’ and a For Sale sign was out front!
Naturally, I immediately called the real estate agent listed and commenced negotiations … this is one of the advantages of having money 😉
He sent me a brochure showing the property listed at $1.2 million … the negotiations dragged on for a while so I asked a friend of mine who specializes in commercial real estate to step in and he promptly closed the deal for me …
… at $1.287 million!
Great negotiator, huh?
As it happens, I was not too upset about the price, because something strange happened between the time of first looking at the property and the time of signing the contract (which I did last week):
The property is basically an under-loved property on one of the main boulevards leading into the downtown area … not a hip area by a long-shot but a good area nonetheless (close to a railway station, shops, cafes, and with fantastic main street exposure) … all-in-all, exactly what I was looking for.
My plan WAS to simply rehab it: render the horrible yellow/orange bricks (i.e. cover then with concrete mixture to make a smooth ‘concrete look’ that can be painted) and put in large, modern aluminum windows, a new roof, and fit out a new interior (probably $500k all up) then rent it out, to give myself a nice, steady 7% return with even nicer depreciation benefits (over all of the renovations) for the first 5 years.
But, my architect found something interesting: you see this property sits right next to an office tower with 8 floors, which was built over 20 years ago – this building is the ONLY building higher than 2 or 3 floors for miles in either direction …
… until now. My architect found out that the council is suddenly willing to rezone three or four properties around that tall building to allow building to the same height as that relatively tall building next door … my building included!
So now, I am sitting on one the the very few properties that may allow us to build 50 or so condo’s plus some office space, all in an up and coming neighborhood that will have scarcity of such condo’s because that’s all the council will allow!
Needless to say that I am going to get plans drawn up and council permits, then I will decide whether to:
a. sell the property to a developer with plans and permits, which I am sure will net me $1 million+ profit in a mere year or so, or
b. do the development myself.
Next week, I will run you through the numbers …