Sitting on Commercial Property that I want to rent out..?
Hey everyone,

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I am sitting on a commercial property (fully paid off) that I am looking to get leased up and rented out as soon as possible. The property has been vacant for the past 8 years, so it needs of about $50k of fixing up (mostly roof). I have spoken with prospective 2 prospective tenants in the last year, but each time they would move super slow and ultimately failed to close. The property would be perfect for some kind of daycare or pre-school, but in the past it has been used as an insurance and legal office. I haven't worked with a commercial real estate broker yet, but I believe that should be my next step since they actually know what they are doing and since I am essentially leaving money on the table without it being leased up.

How would you all go about this? This is my first time doing such a thing (2 years ago I got lucky in the markets, shortly after college, and made some quick money. Simultaneously I figured out about this property and it was an off-market deal. Figured it was a good place to park money that I wasn't using).

Should I call various commercial brokerage firms in my area and figure out what kind of deal they could make happen? Should I maybe start with emailing them first? What kinds of questions should I ask? I figured they would be able to put together an analysis for me based on comps, and I should be able to figure out what the market rent is in the area (rural area so not sure how great comps would be). I am 24 years old, so would they even take me seriously? I heard commercial real estate brokers typically charge about 2-5% of the entire lease, which at first I waned to avoid but at this point I would rather just start producing income out of the property.

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I haven't done any marketing for the property at all, and any prospective tenants have simply called me to  start the conversation. There is some interest in this property as I've had quite a few people call me about it, but I was in the middle of working with other prospective tenants so never followed through.

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My ideal deal would be to have the tenant do all their repairs and rehabbing to suit their needs, then I take that cost out of the lease (give them free months in return of cost of fixing the place to suit their needs). Is this even possible/normal?

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Thanks everyone, I appreciate the help!
[{"id": "il7yumq", "text": "You figured a rural commercial property that has been vacant for 8 years was a good place to \"park your money\"?", "replies": [{"id": "il9lhif", "text": "His money was a windfall. Easy come, easy go.", "replies": [], "depth": 2}], "depth": 1}, {"id": "il80goi", "text": "Your instincts are on point. Talk to a broker. They can reach out to their tenant contacts or fill with tenants that have immediate needs and want to be here. \n\nAs one Redditor commented, your location may make this a tough place to lease out, so your best bet may be to find a tenant with good credit and sell the building to someone who's from the area. Sounds like your other prospective tenants flaked because of the building location, the condition of the building, or both.\n\nBefore you start doing any tenant improvements (or general deferred maintenance improvements), talk to you accountant about bonus depreciation and a cost segregation study to find out if this is worth your time or will be worth your time when you have a prospective tenant.", "replies": [], "depth": 1}, {"id": "il83hw3", "text": "*\"I haven't worked with a commercial real estate broker yet, but* ***I believe that should be my next step since they actually know what they are doing and since I am essentially leaving money on the table without it being leased up.***\n\n*How would you all go about this?\"*\n\nAsked and answered.", "replies": [], "depth": 1}, {"id": "il8hxpl", "text": "The fact that it was vacant for 8 years is very scary. It sounds like a tear down. Do you mind saying how much you paid for it? And what part of the US are you in?", "replies": [], "depth": 1}, {"id": "il8lrxo", "text": "If your in Cali i can help \nIf not in Cali i can sorta help lol \nDm me", "replies": [{"id": "il9zf6f", "text": "Wouldn't trust someone who can't you're", "replies": [{"id": "ilaq30t", "text": "Dam 3 down votes lol my bad i was just looking to help for FREE geez yall are so anal to be on reddit lmao", "replies": [], "depth": 3}, {"id": "ilatqx1", "text": ".....\"spell\"....", "replies": [{"id": "ilc9t63", "text": "He can spell, he can't grammar", "replies": [{"id": "ilcfwbt", "text": "Allow me to assist further:\n\n\"Wouldn't trust someone who can't ...... ***spell*** *......* you're\"\n\n*^(You may now return to your regularly scheduled programming)*", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ilb76vz", "text": "Hey, I was in commercial Real Estate and letting tenant to make improvements is a shitty idea. When this tenant leave, he tends to rip off everything including HVAC and flooring. The best strategy - do your own work! Roof, basic flooring and walls, toilets etc. You should find a tenant first, and then do your part. \nDon't do anything upfront (maybe only the roof), your tenant could require something pretty specific.", "replies": [], "depth": 1}, {"id": "ilcm1xp", "text": "Call a local expert in your market who has worked with this type of property before. Where are you located?", "replies": [], "depth": 1}, {"id": "ilddbeo", "text": "Yes, you should start talking with a broker. Speaking from experience, leasing a building is very difficult on your own. You are correct, they will likely charge a 4% fee but that fee will be taken out of the future rental income rather than out-of-pocket payments.\n\nYou will want to ask what other buildings they are representing in the market to see if they are representing competitors. Other questions will surround the market lease rate, market TIA, market lease term, and if you have the potential to get a credit tenant. Credit will be a very important factor and will likely drive up your TIA spend if you get a good credit tenant- since they will likely be there for the duration of their lease.\n\nThat being said, you will want to check out the zoning requirements for your intended use since education is likely different than standard retail (insurance office). IF you plan to rezone, this is a costly/lengthy process and will likely cost you $50k+.", "replies": [], "depth": 1}]