Seeking Advice on Demolition Costs and Investment Potential of Distressed Property

[Jimmy Perron]

Hi BiggerPockects Community,

I wanted to get your thoughts on a unique investment opportunity I stumbled upon recently. Yesterday, I found myself at our local brewery – arguably the best spot in town for both a pint and some insider info. While there, I ran into a friend who's a seasoned realtor and, as luck would have it, he had some intriguing insights about a property I've been eyeing: 2265 Miller Street, Terrace, British Columbia.

Here's the scoop: The property, priced at a tempting $215,000, is part of an estate liquidation – the previous owner passed away, and the heirs are looking to sell. It's got a substantial shop space that screams potential, but there's a catch – the residential structure on the land is in a state where it's better off removed. Over a round of beers, a local carpenter chimed in, suggesting that demolition costs could soar as high as $100K.

I'm seriously considering this investment but weighing the pros and cons, especially those hefty demolition costs. So, I turn to you, the wise and experienced BiggerPockets community, for your invaluable insights.

Property Details:

• Type: Commercial/Residential Mix
• Price: $215,000
• Unique Features: Large shop area with potential for various business or creative uses.
• Considerations: The residential structure on the property likely needs to be removed.
• Zoning: RU3 (High Density Rural), allowing for a variety of uses including hobby farms and home occupations, with certain building and site coverage restrictions.

Key Challenge:

• A local estimated the cost of removing the house, including asbestos testing and abatement, could be as high as $100K.

Context:

• The property is part of an estate liquidation following the owner's demise.
• The primary value lies in the commercial aspect (the shop), with the residential part holding little to no value in its current state.

Given this scenario, I have a few specific questions for the community:

1. 1. What are the potential challenges and benefits of investing in a property with a focus on the commercial aspect (the shop) while the              residential part holds little value?
2. 2. What strategies or approaches would you recommend for managing and financing the demolition and asbestos abatement process?
3. 3. How might the history of the property (owner's demise, succession's liquidation) impact the investment?

I would greatly appreciate any insights, I'm especially interested in hearing from those who have undertaken similar mixed-use property investments.

Thank you for your time and expertise!

Jimmy

[Mackenzie Grate]

First off, congratulations for putting yourself out there and finding a potential opportunity! That means you are on the right track.

One recommendation in the future, I wouldn't put the property's exact address on here. You never know who might be out there looking to swoop and scoop. Hopefully people won't, but just giving you a heads up.

All of these questions should be answered during the due diligence period. I would recommend you call companies that do this sort of removal and have them give estimates. 100K seems high, but then again, I'm in a different market than you with a different cost of living.

In terms of potential challenges that may pop up, you may have issues with title. That will come out when you run title check. Also, it's important to explore what type of commercial usage the property had. You want to make sure there are no environmental issues if it was used for purposes like a mechanic's shop or dry cleaners, etc.

And rely on your real estate agent to connect you with the right people to help do this investigative work. That is what they are there for. They cannot legally give you answers, but they can recommend professionals who will.

Lastly, try to lock it up but also have a clause to get out. Go for it now, make an offer but make it contingent on those things you need it to be contingent on. Then do the research and get your answers. If it doesn't meet the contingencies, you can walk away no harm, no foul.

Hope this helps. And even if this isn't "the one" you are on the right track and doing all the right things to find "the one." Keep up the awesome work! I'm excited for you!