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  1. #1
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    Default Building Purchase Questions

    My wife and I keep a casual eye out for properties and one came up recently that peaked our interest. Before anyone delves too deep, this is just casual. I haven't looked at the property other than what little info there is online.

    5 acres in the country. A few houses nearby. Building was previously a machine shop or tool & die shop, but I cannot find records on them. Built in the 1980's. Two seperate buildings, one 10,000 sq feet of "shop", the other 2,000 sq feet of office space.

    That is about all I know currently...

    $229,000 asking price.

    Seems an outstanding value to me?

    I've never bought commercial property, so my question is... what should my next move be? Call my lawyer first? Call a realtor first? Call the bank first? Call all 3?

    Probably call my insurance company first and see what it would cost to insure...

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    Call the bank and realtor first. Look at the property and see why it's so cheap.



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    I would drive over and see it in person. Talk to neighbors about what the shop did there before, you might learn about how the neighbors felt about having a working shop next door. The shop could be sorely missed OR they could have driven it away with BS complaints about anything and everything under the sun.... I would even prod them and ask how bad it was having a shop next door, you heard they can be noisy and smell bad.... see what responses you get.
    Then check in at the county to see what you can learn about use permits, zoning etc... Probably good to have the APN - assessors parcel number for that but the address "should" be good enough.
    Once all that checks out then start in on your insurance, bank, realtor, lawyer list, dont waste their time if you can do a quick look first to see if you really like it.

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    Get a phase 1 environmental site assessment . . . sometimes cheap property can get really expensive.

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    Sometimes a good deal really is a good deal. Don’t spend too much time trying to figure why it’s so cheap. Make an offer contingent upon an inspection and a review of records. If your offer is accepted then delve into an intense investigation. Just make sure your offer gives you an out.


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    Quote Originally Posted by adh2000 View Post
    Sometimes a good deal really is a good deal. Don’t spend too much time trying to figure why it’s so cheap. Make an offer contingent upon an inspection and a review of records. If your offer is accepted then delve into an intense investigation. Just make sure your offer gives you an out.
    I agree.
    You did not say how long it has been on the market. If its been 10 months is a whole lot different than listed a day or two ago. If only a day or two you need to act fast, as in go by there today or tomorrow and get on the phone to real estate people first thing monday morning, 10 months not such a rush.

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    To me that is stupid cheap. 12,000 sq. ft.? Thats $19/sq. ft. with no value for the land. I could barely build an uninsulated pole barn with a dirt floor for that money. To me, a metal building with good insulation, good floor, and suitable electric for a machine shop will cost $50+/sq. ft. to build, not including site prep, land cost, or utilities.

    Things to consider: grade/site prep (flooding potential, even local ponding), environmental issues, well or utility water, septic or utility sewer, zoning, truck access (can a 80,000# truck get there legally, including bridges), road condition and weatherability, electric service, floor thickness, ceiling height, insulation, roof type and condition, natural gas or propane. There are more, but thats a quick list.

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    First off, figure out how much you can afford. If it's commercial you're looking at a huge down and a short term or an owner carry situation.

    If you think you can secure the funds then make an offer. Just make any offer that will accept. doesn't matter much at this point.

    Then you have a time period where you inspect and negotiate. This is where you beat them down over every little thing or find the real bad stuff and back out.

    Real estate's so backwards. just remember- Offer first. That's the very first thing you do and offer high because the number really means nothing at that point. Once you offer you have months to sort out all the details and negotiate.

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    Quote Originally Posted by motion guru View Post
    Get a phase 1 environmental site assessment . . . sometimes cheap property can get really expensive.
    you can always write a purchase agreement contingent on inspection or maybe Clear title ..I can't remember off hand...
    ask me how I know

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    also can you get deliveries of shop supplies, steel etc and pickups of finished jobs from the site or is it too remote?
    Ring the local suppliers

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    You didn't say what state the property is in or general area.

    Tom

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    Quote Originally Posted by Fal Grunt View Post
    My wife and I keep a casual eye out for properties and one came up recently that peaked our interest. Before anyone delves too deep, this is just casual. I haven't looked at the property other than what little info there is online.

    5 acres in the country. A few houses nearby. Building was previously a machine shop or tool & die shop, but I cannot find records on them. Built in the 1980's. Two seperate buildings, one 10,000 sq feet of "shop", the other 2,000 sq feet of office space.

    That is about all I know currently...

    $229,000 asking price.

    Seems an outstanding value to me?

    I've never bought commercial property, so my question is... what should my next move be? Call my lawyer first? Call a realtor first? Call the bank first? Call all 3?

    Probably call my insurance company first and see what it would cost to insure...
    At 229 large asked? Figure 195-200 large closed?

    Sumthin' ain't quite right there, Trump economy vs the several brand-immaterial suicidal ones before. Buckeye State has been accurately reflecting the Yew-Ass center of gravity since Big Bang.

    Pull up the google earth view, topo elevation, check flood plain, drainage, soils geology and tax base. All from your desk and free for the effort. This is part of how we shop overseas property - or Houston, TX ...so as to not get flooded out.

    Some things yah just cannot fix, cheap or dear, either one.

    Nice deal ain't so much if it is in the middle of a friggin' swamp, atop a prehistoric peat bog or subsiding coal mine, at risk of seasonal floods, has a road-net too often impaired by severe weather & such, or s**t-lousy utility mains power, ditto water & sewer.

    Ohio is generally harmless, lower-risk, than next-door up-and down Appalachia. That's part of how Akron became the de facto economic Capitol of West Virginia, long ago. Even so, some parts are tougher to deal with than others.

    THEN go see it, etc. DO keep in mind that somebody already failed commercially - or maybe just DIED, physically - in that facility or it would not BE on the market and cheap. "Suspiciously cheap" even. Zoning or other restrictions? Poor foundaton prep? Slab too thin? Wise to find out which, how, and why.

    Also for every property you see, there are ten more if only you look more-harder, so don't get "target fixation" and fly into an obstacle, yah?

    2CW... and who knows how many properties nor where.

    Wife & her kid sister are better at it. Johnny and I just stay TF out of their way. And the staff they've hired to mind their mini-empire so they can fly off to golf and hiking and concerts on other continents. You'd have to know retired Executive "Tai Tai", proud they never PAY interest. They COLLECT it, rather.

    韓家標

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    I can't comment on value, don't know whats there or where it is, but as a suggested process.....

    how'd you find out - is the property listed? If so, call the listing broker, having one broker involves lets you negotiate the fee down at the appropriate time. Called a commissondectomy.

    Before spending money on a lawyer, work the agent for all info you can. imo you must get a real estate lawyer. its cheaper and better quality to get a guy/gal who does real estate all day as the main focus of their practice. You can let the agent draft the offer (free) and your lawyer review (I've done hundreds so don't bother, review it myself, but you're not in the space, better to have lawyer look it over).

    Ask the agent for info, survey, any environment reports, whats going on here, whats up with the seller etc. I believe most jurisdictions create liability for them if they don't disclose things material, but it doesn't hurt ask and get them talking.....and people will often say more than the intended to when engaged in a friendly conversation. Present objections to the agent. see how they react, you might get insight, terms etc...Negotiating 101.

    A phase I environmental is a good idea, but of course you tie the property up first with a conditional period. The problem with them is CYA....if there's been prior manufacturing uses there's a good chance the Phase I consultant says they didn't find anything but recommend that a phase II to give a clean bill of health. Phase I is a review property history, Phase II is physical test and expensive). So have you really learned anything from the Phase I?

    If you're getting any financing on it, ask them what they need. They may insist on a P1 and when it comes it may trigger insistence on a P2...but its guessing until ask. Chat up a few environment assessment guys, how does the ball usually bounce. . Do that, and all the standard due diligence items (some of which the lawyer will do): title, physical condition, taxes, any municipal issues etc

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    Zoning would be the absolute first thing I would confirm.

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    I agree, go look at it asap and check it out. Do as much legwork and homework as you can yourself. You will fairly quickly determine if you want it or not without needing to talk to anyone else.

    Also, one thing that may get missed you should put on your list is whether the location has good internet service. Many many other things are more important, but long term not having decent service will be a daily bummer.

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    Appreciate all the input everyone!

    I've done as much legwork as I can seem to do from the computer. Will make a couple calls tomorrow and see what else I can find out.

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    we just closed recently on a 30k sq ft building there are deals out there but there is typically reason(s) for the price. def get a phase I environmental this threw us a big curveball as the banks want to see this to see what they are investing in. in our case it lowered the offering price 50k but the original bank backed out cause of the findings. also helped the listing agent seemed more into residential/commercial property helped keep potential buyers not find it. we didn't pay much more then what you are looking at and our property included a metric sheet load of materials and equipment. def was a circus of a process was almost a year from start to finish with the hiccups....

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    Quote Originally Posted by Fal Grunt View Post
    5 acres in the country. A few houses nearby. Building was previously a machine shop or tool & die shop, but I cannot find records on them. Built in the 1980's. Two seperate buildings, one 10,000 sq feet of "shop", the other 2,000 sq feet of office space.
    Going off of this little description I am not convinced that it is cheap enough as to warrant suspicions as others suggest. What exactly is 10k sq ft of "shop"? A 40yr old building on 5acres of rural land just might not be so valuable, but that's not to say it isn't nice or wouldn't work for you.

    What does land "in the country" go for out there? I could see a rural 5acre parcel may go for $10k an acre or less in a lot of areas, and then could you build a building and utilities with the remaining $180k? (consider depreciation for 40yrs of age on the current building) Not to say that it is easier or cheaper to build from scratch since it is not usually, but just as a way to decipher the value of it by breaking it down into parts.

    Best of luck if you go for it. Curious to see what it is.

    Quote Originally Posted by wheelieking71 View Post
    Zoning would be the absolute first thing I would confirm.
    x2

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    Tillable farm land is $12k-$15k an acre. Land with access to utilities is typically $20k-$30k an acre. Undeveloped land with no utilities is typically $8k-$10k an acre.

    The 18 acres of farm land surrounding my house is currently listed for $400k. Though it is zoned C-1 if I remember right.

    Just for reference

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    Quote Originally Posted by johfoster View Post
    Going off of this little description I am not convinced that it is cheap enough as to warrant suspicions as others suggest. What exactly is 10k sq ft of "shop"? A 40yr old building on 5acres of rural land just might not be so valuable, but that's not to say it isn't nice or wouldn't work for you.

    What does land "in the country" go for out there? I could see a rural 5acre parcel may go for $10k an acre or less in a lot of areas, and then could you build a building and utilities with the remaining $180k? (consider depreciation for 40yrs of age on the current building) Not to say that it is easier or cheaper to build from scratch since it is not usually, but just as a way to decipher the value of it by breaking it down into parts.

    Best of luck if you go for it. Curious to see what it is.


    x2
    Country typically has zero zoning. Where I am if you ask about zoning at the county office they will look at you like you're retarded.



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