Hey Millhouse, You Want a Job in My Factory?

23 Replies

If all goes well tomorrow, I'll own a factory. Pretty much comes down to the environmental certs. 12,000 plus square feet, new rubber roof, new dry sprinkler system, 50 foot ceilings, 600 amp 208/120 3 phase power, supplied by 3 pole pigs in a wye. The crane-way is there and solid, but for some reason the crane and the safety-rail are missing. New his and hers bathrooms.


Bart's Factory by Charles_Decker

Yeah, it's in somewhat of a ghetto area, and my GF is going nuts on me about it. But really, who wants to live next to an old steel warehouse. I can't imagine some ladies garden club wanting me charging out the door on my 20,000 pound diesel powered forklift to pick something off a truck.

So here is my question, Real Estate agent seems kinda tight with the current owner. Not that that is necessarily bad, but who is the best person to represent me at closing? My Lawyer? Some buyer's agent?

This is a cash sale BTW.

My first pick would be my attorney.  but my attorney is also my brother-in-law. 

May I ask you plans for the industrial building?

There are more commercial buildings for sale/lease in our are than you can shake a stick at.

Definitely a buyers market if you have a purpose for owning one.

Buying it for what the new roof and dry sprinkler system are worth, Maybe not even that much, everything else is a plus, and the taxes are low.

I want it to store and repair my equipment, and the rest for warehousing.

@Joe Cummings

I would look for an agent in your area that specializes in commercial real estate. Its going to cost you the same if you bring in your own agent or use the Selling Agent, as it would already be written in the listing contract between the seller and listing agent.

The real reason to use your own is because the selling agent is only responsible to get the best dealer for the seller. And if there end up being any complications later on, your agent should be carrying a few million in E/O insurance that would cover that cost (if you went to court). Just something to consider.

@Jake Rees

Jake,

What types of E & O might there be in this kind of deal? Don't get me wrong, I'm not saying you aren't giving me good advice. I am just trying to understand how a buyer's agent is protecting me. If the title is clear, and the enviromental certs are clean, what else is there? A problem getting a U&O certificate?

@Joe Cummings

Joe,

I understand what your saying. Im going to give you the down and dirty version. 

In reality it doesn't matter who you go with, the important thing is you have someone watching out for your best interest. The buyers agent is protecting you in the same way the lawyer is, making sure the contract is valid and if any problems occur, they are at fault. (I'm not saying real estate agent or brokers are the same as Lawyers) The E&O almost never comes into play, but its a good safety net to have just incase. I have never had a problem with an all cash deal and they very rarely go wrong. All contracts come down to terms, if its an experienced agent or Real Estate Attorney, they should be able to look at that and make sure nothing extra is written into the contract. One benefit of using an agent is that it is built into the cost of buying the property, as it would already be written into the contract by the listing agent. If using an attorney, that would be paid out of pocket.

It really comes down to who you would rather work with. I would rather work with an agent that I trust than an attorney, like Jeff would. Because in my state I am better protected that way.

I hope I answered your question thoroughly. 

Well the plot thickens. Paperwork from the realitor says "commercial property" I check the zoning map and it's R-3,,,,WTF, must be some mistake. So I go down to city hall to the zoning office to check it out. No mistake, it's zoned R-3. So now the clerks at city hall are wondering if there is some mistake and they pull up a picture of the property, and sure enough we are all talking about the same place.

Now lots of confused looks. Everyone agrees that this is a large industrial building. And they even tell me how much better it looks now than when their file photos were taken in 2003.

Now they bump me up a level, and the lady comes out and we talk for half an hour about what I want to do there. I show her the pictures of the new sprinkler system, all new electrical, new bathrooms, new concrete floor. She tells me she's going to call her boss and try to see what's up. 

More calls, She asks if I can wait around and we chat, Turns out that former owner was Mr Urban Blight who was in the used appliance business, and the place was a pigsty. Trash allover the property, grafitti, broken windows. She shows me pictures, it's almost hard to believe it's the same place.

So now she gets a call back. Yep it's R-3 and I will need to go before the zoning board to get it changed, and they will "probably" find in my favor, BUT the application fee is $1,000 no matter what the outcome.

Now the deal is F-ed all up and I withdraw my offer, and adjust down like 30 grand. Lots of sad faces. I'm like ok you fix it and I'll go back to my previous offer. Agent promises to get back to me this week.

So it's 5:30 AM on a Sunday Morning. I've been up for two hours researching the zoning board, and local lawyers trying to figure out who has the inside track.

If this wasn't a crane building, I would have walked away as soon as I knew about the zoning problem.

Now the nice folks at city hall are telling me that the owner never pulled permits for any of the work. How does this happen? The new floor alone was over 200 yards of concrete, This is on a main street 5 blocks from City Hall. There is over 12,000 square feet of new rubber roofing, not to mention a brand spanking new dry valve sprinkler system.

Nobody noticed?

@Joe Cummings

Its amazing the stuff people don't notice. Keep us posted on how this turns out.

oh my...what a mess!  Can't wait to see how this one turns out!

if I come and work there,  will u make Lisa be my admin? 

Originally posted by @George P. :

if I come and work there,  will u make Lisa be my admin? 

Yeah, but Luanne is mine

Finally got the owner's cell phone number. Turns out we run in the same circles. I think we're going to work this out away from the "suits" with some numbers scratched in the dirt with a stick, and then tell the suits to write it up and make it legal. There might be some goats, a pig, and a cow involved.

Boy, can a suit ever screw up a deal between a couple of Dutchmen.

@Joe Cummings , any updates?  Really curious to hear how this turns out.

Well I had a meeting with the city planning commission on Thursday (4-9-15). 

Zoning Variance is going to cost me $1,100 and that is more or less a given provided I comply with the following requirements.

1: Handicapped Bathrooms.

2: Letter from the sprinkler system's installer stating it is designed for a truck and heavy equipment repair facility.

3: Sprinkler system monitoring service. 

4: Floor drain with grease/oil-water separation capabilities. (There are currently no floor drains in the building)

5: Exhaust extraction system for motor vehicle exhaust

Joe, not sure of where this is located or if it could make any sense from a market perspective but since it seems to be "mistakenly" zoned R3, is there any potential value to a residential or multi-family developer to come in and put a development in? If so there could be great potential for you to profit flipping it to a developer and then finding another property for your shop....Just a thought...

Originally posted by @Joe Cummings :

Well I had a meeting with the city planning commission on Thursday (4-9-15). 

Zoning Variance is going to cost me $1,100 and that is more or less a given provided I comply with the following requirements.

1: Handicapped Bathrooms.

2: Letter from the sprinkler system's installer stating it is designed for a truck and heavy equipment repair facility.

3: Sprinkler system monitoring service. 

4: Floor drain with grease/oil-water separation capabilities. (There are currently no floor drains in the building)

5: Exhaust extraction system for motor vehicle exhaust

How much is all that expected to cost?  Is the current owner going to cover it or are you splitting costs?

Also, what was the deal with the R-3 zoning?  Was it originally industrial and they changed it to R-3 hoping to get rid of the the eyesore after the owner let it go enough to condemn it or has it always been R-3 and no one just ever paid attention?

@Rick Bevilacqua

It's a great 12,000 sq foot industrial building, sitting on low value real estate. Basically an economically depressed area where the "nice houses" are selling for 40,000 retail.

There are much better buildings in town that are cheap cheap cheap that would make better residential multi units. And those are beautiful brick office buildings with plenty of parking. Think 13,500 SF with an elevator, 4 story for an asking price of 200 K. 

Residential there is risky, The market is low right now, but if they electrify the rail, and start running commuter service into Philly, it's going to go sky high.

Gotcha! I figured that may be the case (area) but thought it was worth mentioning...Good luck with everything! Sounds like a great building for the price!

@Lee I.

Owner wants to just wash his hands of it, he put a ton of money into it and hasn't made one cent. 

Really most of what they want is no big deal. I'm a bit hesitant to open up the new concrete floor. It was an industrial building since it was new in 1870. I might find something that I don't want to find.

As far as to why the R-3, I don't know. There is a scrap metal dealer on the same block who is also zoned R-3

Best of luck Joe.  Hopefully there's no environmental problems lurking under the concrete.  Keep us updated on any crazy new developments.

Joe, did you have a Pase 1 Environmental done?

@Rick Bevilacqua

No.

It was part of a steel mill 1870 - Mid 1980's. Then an auto repair shop, and a salvage yard until 2011. It had a dirt floor during all those years.

I know these kinds of sites. For all I know Jimmy Hoffa might be under there.

It's a Schrodinger's Cat kinda thing. I could believe that the cat is alive forever, unless I open the box

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