Show rooms can be a very good investment. This is especially true for large show rooms and car show rooms in good locations. The high profitable of show rooms is still relatively unknown among property investors and it is therefor often possible to get good deals. There is a limited amount of show rooms available and they do not come on the market very oftem. If you get the chance to invest in one you should at least consider it.
A especially profitable type of investment in show rooms is when a car dealership wants to sell and lease back the property they operate in. This gives you an instant renter that you know like the show room. It is sometimes possible to get the seller to sign a long time lease at the time of the transaction. It is not unusual with 10 to 15 year leases that guarantees both parties stability. Long term leases can guarantee that you get your investment back with interest during the life time of the lease.
If you are considering buying a show room that is rented by a third party it can be a good idea to have an informal talk to the renter before you decide whether you want to invest in the property or not. That way you can get valuable information about what renovations or improvements that might be needed and if the current renter would be interested in signing a long term rental contract. Sometimes it is possible to negotiate a tentative deal with the renter where you promise to make certain improvements or lower the rent in exchange for them signing a long term lease once you have purchased the show room. This allows you to know what return to expect before you finish the deal.
Talking to the renter might also give you an idea about how motivate the seller is, how long he has been trying to sell the property and how well managed the property has been. A poorly managed show room might offer a lot of potential with better management. If you find out that the seller is motivated to sell you might be able to negotiate a better deal. If he has been trying to sell it for a long time you might be able to get a very good deal.
Buying a currently unrented show room present you with a unique set of challenges. The first is to figure out why it is unrented. If it is located in a bad location it might be best to pass on the investment. If the show room is in a good location but still isn’t rented you will have to look for other reasons it is not rented. Perhaps it is poorly managed, needs to be modernized or is to expensive. All of these situations creates good investment opportunities. All these problems are easily rectified.
If you buy a unrented show room you should always take the opportunity to renovate and modernize it while there isn’t any renter in the property. It is easier than doing it later when you have to work around the tenant and their business. It also makes it easier to rent the property out and will allow you to charge a higher price when you do.
It is important to understand that the number of tenants that need a show room are limited. It can therefore take a long time before you are able to find someone who wants to rent your show room. This is true even if your show room is modern and competitive priced. You should therefore always budget a purchase so that you can afford that the property stands empty between one or two years before you find a new renter. It might seem strange to buy a property that might stand empty for so long but when you find a renter they are likely to stay in the show room for a long time and generate a lot of income for you.