Seeking input on a functionally obsolescent property.

7 Replies

So there is a very large building in my area that was built in the late 1890's and they continued to add to it throughout the years. During the due diligence process I found out that it was primarily a toy factory and then later part of it was used a foundry. In my best guess I would say this building is between 10 and 20 thousand square feet. I know that the newer portion of the building is currently rented out to men that restore old cars and trucks. The rest of the building is in need of help. One of the walls is blowing out, it needs a new roof, there is a portion in the back of the building that suffered some fire damage and that was never repaired, and there is some foundation work that needs dealt with. The value of the building is somewhere between $20,000 and $50,000. This is the part where everyone yells STAY AWAY FROM THAT PROPERTY; however, this is the part of the story that gets interesting. Roughly two decades ago, my father entered a handshake deal with a business partner that REALLY wanted this property. My father really didn't have the extra money to put down on this  property and tried to talk this other man out of it. Long story short, my father ended up with this building because the other man backed out of the deal last second. Although the tenants literally paid the entire mortgage; the income did only that and nothing more. There was typically no extra money to reinvest in the rest of the building. Not to mention that my father really didn't want anything to do with it. Another issue is that this building is filled with random items that have been accumulated over time. My father is ready to get out from under this building and see it put to a good use. I know this has been a long post but if anyone could share their input on what they think my father and I should do with this building it would be greatly appreciated. One last quick fact: He is willing to let me use a part of the building for anything I want but that requires moving A LOT of stuff around. Any help is good help. 

Across the street from my office there was an old 1960s ranch house. It might have rented for $700 a month. The young couple that bought it let it sit vacant for quite some time. Finally I had a chance to talk to them about it and was surprised when they said they were going to tear it down and build a four plex. Well after that they made good on their promise and today the building is almost complete. They will get $900 a month for each apartment. They know this is true because they have 28 other rentals in this area. So where I saw $700 a month, they saw a speed bump for a bulldozer because they had a plan for something better. Now I'm looking at these functionally obsolescent properties in a whole new light.

Best positive thoughts to you @Justin Grubbs for inspired thinking.

Have you talked to a commercial real estate broker? A business broker? I have about 100 questions from environmental to lot size to location. But exploring 'best and highest' use that an appraiser would suggest might be an option as well. 

@Ron Wickersham Thank you very much for your input. That certainly expanded my though process and put many different things into perspective.

@Chris Martin We have not spoken to anyone else about this property. I suppose that would be a good place to start haha. As far as the questions you have; I will gladly answer any that I can and search for the answers to the ones I may not know the answer to.

As Ron (indirectly) and I (directly) both stated, you need to find the 'best and highest' use that professionals in the real estate field... let me restate that... that competent professionals in the real estate field should be able to find for your property. 

I agree with everyone get a competent professional opinion but you have a myriad of potential opportunities 

I love old buildings. The first thing I think you should do, is have a soil test done. There may be an environment issue. If that is the case the cost of the clean up may not be worth the time, energy and the build value might be in the minus column, rather than be worth 20k-50K.

I think that loft type apartment are rockin in all parts of the country. Live-work space rent very well. I travel a lot, always looking for deals. This works in Brooklyn NY (3M people) and in Greenville SC (60K people), and every city size in between. You might be able to convert the space into live-work or loft apartment. 

Everything is blending these days, big city, small town. I don't know where the building is,   Girard, PA or someplace else, But I would look into conversion.

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