We Finally Finished Unit 1 In Our 7 Unit Building!

Our 7 unit building is anchored by a commercial storefront unit that has large shop windows on 2 sides of it.  This is a 900 square foot unit that is a single large room with a small bathroom.  Originally this unit was used by a pharmacy when the building was first constructed and most recently was used as a barber shop. After the barber shop closed down the previous tenant was still storing a ton of items in the space.  This is likely the most difficult unit to rent out due to it being just 1 large room and being surrounded by windows.  I feel this would be a perfect location for something like a dance studio or karate studio.

Rehabbing Unit 1:

Our primary focus when we acquired the property was to get the residential units rehabbed and rented out.  We knew the demand for affordable apartments was very high and we would not struggle to find tenants.  We spent most of the fall of 2024 and the spring of 2025 on the apartments.  After accomplishing this we put some focus on this unit and hired out some of the work.

Deep clean: After the barber shop closed down, a previous tenant was storing his junk in there and he also had several animals.  The previous tenant did remove a lot of his personal belongings, and vacated about a month after we closed on the property.  The pictures above were taken during our showing of the property prior to buying it. The floor was salvageable, but needed some deep cleaning.

Ceiling tiles: Several of the ceiling tiles were in disrepair due to roof leaks.  I repaired the roof leaks when we first got the property and validated they were fixed before replacing these ceiling tiles. The drop ceiling has been painted black, so we also needed to paint all of these ceiling tiles before installing.

Roof Leak: This unit had a roof leak over the bathroom.  I fixed this during the initial phase of buying the property last year. I ended up fixing it myself after a long diagnostic process.

Painting: This unit was painted a terrible light green.  We had it painted white.  This helped contrast the black ceiling. We hired the painting out and I’m so glad we did. This is a lot of square footage and painting brick can be tedious.

Listing it:

We first listed this property back in March and had several interested parties.  Each group ended up dropping for different reasons, despite us being flexible with them and trying to make creative deals.  One tenant couldn’t get past that the heat was electric and paid by the tenant.  Two other tenants didn’t want to go through the process and the expected expense of the business permitting required by the city.  We had 2 other prospective tenants find out that the businesses they wanted to start were not approved for this location.  Although this property is commercially zoned, it is considered “local commercial” so it has more use case restrictions. For example, we are not allowed to use it for self storage.

After having so many deals fall through, we paused the listing and focused on other projects.  We then had someone break into the front door and cause further damage to this door.  We hired 2 separate lock smiths to repair the door and unfortunately these doors are original to the building and the parts to fix them don’t exist anymore….they are also a pain in the butt to work on, and I think that is also a factor.  Anyways we needed to get quotes to replace the door.

Replacing The Door:

We were advised to contact a window company and the commercial window company that replaced 9 windows for us earlier in the year did a great job and their pricing was very reasonable.  We asked them for a quote and when we received it there was some sticker shock.  $3,300 to replace it. I figured this as the “we don’t want to do this price” and we looked elsewhere.  We had 2 separate companies ghost us and we went back to the original company, bit the bullet and agreed to pay the $3,300.  Ouch. There was also a long delay because the door needed to be custom made and the contractor had a large new construction job going on.

Relisting in October:

We relisted the property in October. Originally we were looking for $800/mo for the property with an $800/mo security deposit. We decided it was better to get more options by listing with a lower price, especially since we were heading into winter.  We listed the property for a commercial lease for $700/mo and a $700 security deposit with a $100/mo heating credit for December – March.   This would result in a net $8,000 increase to the yearly income for the property.  With water being the only shared utility even if they used a ton of water, we would be at around $7,500 added to the bottom line, since the other units are already covering the remainder of the expenses.  $7,500 in added rent at a 10 cap rate adds $75,000 in value to the property.

It is also likely that a business may be more interested in starting up here with the new development coming in at the old Mercy Hospital site a block away. The project had been in limbo for years and is finally moving forward.

In addition to the space inside the building, we are also including the side lot across the street for their clients parking.  This transfers the responsibility for that lot from us to them. The parking lot adjacent to our building is large enough for the rest of the units.

We have another unit on the lower level that is almost done that we hope to have listed before the end of the year. Overall we are very close to this building being fully stabilized.