I answer Rhonda's question about urban mixed use plays in Philly. Watch the video to find out what the key is to making mixed use properties work.
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Hi, all right Rhonda I will try not to sing the song.
Let's see I have several mixed commercial properties that I ‘m evaluating now.
Ok. Here's one that is located in the Italian Market Section of Philly (Remember Rocky running through the streets?)
I was just that meat market area they have any sausage, I like Italian sausage can you send me some that'd be cool.
I'm kind of half joking but kind of not.
It is zoned CMX2 – meaning the bottom level has to be commercial space, but it has two additional levels for residential. Ok, according to listing it has potential space for up to 20 apartments and parking.
Ok, the commercial space was previously a seafood store and the top floors look like they haven't been rented in a while. Jay, there are so many of these locations that are becoming sidewalk cafes in the city. But I don't know how to make the numbers work.
I tried to attach the picture – but no copy paste here.
Ok, Randolph, one thing whatever you were trying to attach the picture let Jacob know so that we can maybe there's maybe there's something we can do to help the whole copy-pasting happen.
So again when the numbers don't work and I was just saying this to my brother, because he has a four bedroom house in the DC area and he was like I want to move and rent this but I can't make the numbers work well.
When the numbers don't work one of the first places I look is the income. Ok, so remember the let's see the equation is “income minus expenses” equals in a while. I'm going to stop right here.
Well if the numbers don't work just like your you know like at home when your take-home pay minus what you pay every month and that numbering what you are happy with, you know what's left over you either:
a) Have to lower your expenses or
b) Come up with another way of increasing your income.
So in this real estate space there-there is so many plays with mixed use property become ridiculous. What the question you must learn to ask yourself, Rhonda and this old clear it up is “Who is your? …
Now watch this because I know some of you think you know what I'm going to say best is the word that I'm going to insert but yes you did know this last word customer “who is your customer” but in this particular case you need to know who is the absolute number one best customer for that type of space in that type of area, you're saying that there's a lot of competition or a lot there's this trend going.
Well cool, I love trends.
But when you see a trend you've got to learn to ask one question. Why? What is driving that trend? Something is I don't know what it is you do What is driving that trend? Why are those things happening?
Those things are happening for a reason usually when you backtrack you'll find out why that something is happening and you begin to have ideas for other types of customers that could take that exact same spot and look for that.
I mean that type of what you're describing right there. I mean honestly the one of the first customers that come to my mind is Starbucks, because you're saying it has to be commercial on the bottom and residential on the top, but you're telling me it's surrounded by sidewalk cafes that sound like Starbucks area to me.
I mean if there isn't already one their I buy the property context are books find out if they're open you know to the idea. That’s what I'm seeing you know again if I had a picture. I'd probably say so I may say something different but I don't know the point is is it's going to be hard to make the numbers work until you understand the customer once you understand the customer you can begin to figure out who that is if the customer.
Is going to be the same because what you're also saying is the way that I see it as the apartment buildings in the parking and acceptor those numbers.
Aren't going to make this thing work.
Well, then it can't be that customer you just eliminated that customer from this particular possibility because the numbers don't work for what that customer traditionally values this piece of real estate. So let's find a different customer I don't know who that a customer is but other things that come to mind or schools, for example, specific trade schools so I you know I can go dance you know I can go the so we go down the art path but we could also go down the technical path because it what that would be a kind of unique situation to be able to live above the school that you actually attend.
But I'm sure some people would be open to that in some way shape or form the point is I just. The point is, all I'm doing is changing the customer who goes there you've got the part of the challenge we got too many options.
You just got too many options and it's not easily narrowed for you so it's you know and you're looking at it just like everybody else.
The reason it's probably still available because everyone else is going well I can't make the numbers work for that so I'm just going to find a different property as opposed to applying a little bit of ingenuity.
Another thing that comes to mind again these are just random things that are coming to my mind. A cellphone store “AT&T”, “ T-Mobile” etc. If you've ever been too Long Beach California, on the second street long beach California the second tree if you haven't been there before, go to Google.
Was that Google maps can you do that satellite view is that the ones you can do that with the street walk thing? Oh Google Earth, that’s the one so go to “Google Earth” look at Long Beach California. Lookup Second Street and walk it and you'll see on the left and the right it's a lot of what I'm interpreting you were saying.
It's a lot of mixed-use, it's a lot of commercial on the bottom you've got some residential on top, that's the kind of area that's going through my head.
My guess is you'll get some ideas of who some of those types of tenants could be that might give you a different vision, in fact, it might give you such a vision that instead of trying to buy the building you might buy the block and that could be what it takes to actually execute, what is your type or what you're starting to think about?
So and that's really what it comes down to Rhonda's what is going to be the best customer best use of all of this real estate, not just this one building you know what we do Philly a good service. What does it need and what's going to be able to make it all work at the end of the day.