Bidding on a multitenant 5 store fronts building in Chicago (Built up area 6375 sq ft, total land area is 9750 sq ft) . Received sales package from seller's realtor. Asking price is $80/sq feet for the building while land value is listed at $56/square foot. Is that normal/correct? Land value seems too high in commercial while land value is at a very low percentage in residential in comparison to building on the land.
Please respond. Putting a bid soon.
I am from Chicago, so I have a lot to say about this.
I don't know where this property is. But
1. The land underlying most of the properties on the Southside of Chicago is not worth much. It is the improvements (the building) that brings the value.
2. You are not developing this land, so the land value is not so meaningful. If the structure is destroyed, you will be insured. You will never develop this land.
3. Focus on valuing the building. First, find 3 sold and on the market comparables. That will make you feel comfortable with the price. Second, create a financial spreadsheet. The broker may have one in the package, but usually those are too rosy. While under contract, get the best inspector possible and demand credits or price adjustements for any major capital improvements needed or deficiencies that will cost you money.
4. Last, you said it was a mixed use, so there is a commercial component. You have to value the commercial differently in Chicago. Unless it is in a prime location, the commercial spaces are drags on the investment. They take much longer to rent, the tenants may not be stable, etc...
PM me if you want to talk about this.
Actually the property is in North side of Chicago close to Evanston.
Buying a multi unit 5 storefronts strip mall in Rogers Park, Chicago. It is a good deal with positive cash flow with no money down. Any ideas on Rogers Park as a neighborhood?
No money down sounds good to me. lol
My family also has a piece of land in West Rogers Park near Devon and Western where a restaurant burned the building down back in 2007.
Still to this day we have had challenges on developing the 5 storefronts back up.
Its still a vacant piece of land
Anybody's thoughts on Rogers Park as a neighborhood? Trendy, improving, stable, hot etc.
Thanks in advance.