BUY OLD, THINK NEW

EVERYTHING OLD…IS STILL OLD

Development is a great play for those who can handle multiple years of no cash flow and the

real risk of 100% loss of their investment. Opportunity Zone investing helps lower capital gains

taxes…but there needs to be dramatic success to ever get to that “lovely problem”!

For most real estate investors, the best mantra is “Buy old and repurpose for the young.” The

downside of “old real estate” is that it is similar to our bodies as we age. We don’t suddenly

just get “younger next year” without a consistent (and sometimes creative) investment of time

and effort.

WHERE TO BEGIN

Study your competition for what really grows their business… and not just for what they tout in

their marketing.

a. Does a diving pool draw residents for an apartment, or is it just a costly liability?

b. Older office buildings, with excess parking, may only appeal to lower rental rate

prospects with heavy parking needs (e.g. call centers).

c. Salvation Army may do good in the community, but do they draw shoppers to the other

tenants in your shopping center?

AND NOW FOR SOMETHING COMPLETELY DIFFERENT!

1. Convert a little used pool to a skate board or paint ball park.

2. Create a state-of-the-art board room in otherwise dead space (e.g., basement area with

no windows) for use by tenants for a nominal rate. If the space allows them to “show

well” to prospects, they will pay up for future reservations…and their clients become

advocates for your building.

3. Add pop up stores NON-Christmas time where what they sell is sufficiently unique to

draw prospects for other tenants to your mall (e.g. an indoor farmer market).

4. Do you have tenants – lawyers, accountants, insurance brokers - who benefit from

startup businesses? Provide otherwise unleased space to a JV with the tenant, where

they provide incubator management, insurance, and utilities, and you split profit (if

any). If nothing else, you now have a breeding ground for future tenants (as some of

the startups grow to need their own office space).

5. Remove often broken fitness room equipment and offer yoga classes every night.

6. Churches have proven to be well matched with office buildings with empty space and

available parking Sunday morning and Wednesday evening. What other uses might be

compatible for an owner of vacant office / flex space? Parties hosted (outdoors) in the

parking lot on a Friday night by a local brewery? Pop up concerts in an empty bank

branch building?

7. Add chairs in an empty shopping center space and allow local doctors to hold lectures

for prospects (and hence lure prospective shoppers to your center).

8. Maybe that portion of the space set aside for the church which is not sacred (e.g. the

pews) could be repurposed during the week for showing of independent movies?

9. Negotiate a “no joining rate” with the local gym and pay half of the monthly fee (e.g. it

is only $10/month at Planet Fitness) for any tenant who pays their rent on time

(teenagers will nudge their parents to pay on time so they can go to the gym).

10. Negotiate “free ice cream cone” or “discount on beer” …whatever will motivate tenants

of any property to pay on time (even office managers need a little love to move your

check to the top of the payment pile).

BOTTOM LINE. The world is becoming 24/7/365, and everybody seems to know

everything about anything instantly (even if sometimes incredibility inaccurate). Owners

of investment real estate need become light on their feet and anticipate how they can

profit from the “next new thing”.

Andy Chess