In this episode of Beyond Multifamily, Ash Patel shares his story of how he got started in real estate to demonstrate the hidden value of mixed-use buildings. Some of the benefits of investing in mixed-use buildings:
They are the perfect segue from residential to commercial properties.
If you’re a residential investor looking to dip your toe in the water of non-residential commercial investing, mixed-use properties are a great way to explore another asset class while maintaining a bit of a safety net.
Commercial tenants will often improve your property on their dime.
When Ash was called to help a residential tenant unclog a toilet at his first mixed-use property, he was surprised to see an HVC company on the roof of the property’s store. It turns out that the commercial tenant had paid them himself to replace the entire AC system and the inside furnaces. He also asked Ash if he could remodel the bathroom. It was this moment that convinced Ash to become a full-time commercial investor.
The competition is low.
“Most lenders do not like older, mixed-use buildings,” Ash says. “We now have commercial guys and residential guys and girls that don’t want a mixed-use building, lenders that don’t want the mixed-use building, and that creates the perfect scenario for super-high returns.”
Ash also notes that there is no easy way to search for mixed-use buildings. You can’t specifically search for them using MLS, so you often have to search in both the commercial and multifamily categories to find them.
Multifamily investors can adapt easily.
“There are so many great multifamily operators out there,” Ash says. “If they open their horizons to mixed-use buildings, they have great systems in place, they’ve got great maintenance people, great leasing people — they would absolutely crush it.”
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