A Unique Way to Invest in Commercial Properties

A Unique Way to Invest in Commercial Properties

One way to invest in real estate is by investing in commercial properties.  Commercial properties consist of retail, office and industrial buildings with a subcategory of industrial buildings that include multiple storage units.  Storage units are a great investment because they are easy to build and easy to maintain.  Storage units are usually block buildings with metal partitions that can have either exterior roll up door entrances or interior hallway entrances.  The units can vary in size from 5’x5’ to 10’x30’ and rent from $50.00 to $175.00 per month.  These would be non-heated units; heated units would rent for a premium of $25.00 per month more.
A great way to create these units is to find one-story industrial buildings that are vacant, outdated and need a lot of work.  Purchase the industrial building for 70% of the ARV (price per square feet of an industrial building in good shape) minus the rehab cost to convert the building into storage units.  Once owned, gut the building and install simple partitions to create a hallway and individual storage units with 4’ to 6’ wide roll up doors on each unit depending on the size of the unit.  Put an electronic security lock on the exterior door and allow each individual renter to put a padlock on their unit.  Put security cameras on the inside hallways and security lights on the exterior of the building.
It is very easy to get a 20+ cap rate on storage units bought this way.  Taxes and insurance are low and maintenance is minimal.  Utilities are paid for by the landlord, but they are minimal also; one light bulb per unit and no gas or water.  You can hire a manager or manage the storage unit yourself.
These industrial buildings should be located near residential communities on a commercial corridor so they are easy to access by renters needing to store furniture and other items.  The industrial building should be a minimum of 4000 sf and 10’ tall on the inside.  The partitions can be built with wood studs and one sheet of plywood or metal studs with corrugated aluminum panels.  The hallways should be a least 5’ wide and have doors at each end for easy access.   You can create 40 units of varying size in a 4000 sf shell and lease them for approximately $1.00 /sf. Smaller units go for more per square foot than larger units.
This is just one more way to make a great return on your money by investing in real estate.