bank owned commercial property question

[Wesley N.]

Hi everyone. I'm new here and i'd like to get some opinions on a deal i'm looking at. 

it's in the Chicagoland area.

it's a commercial deal, mostly retail (3U) with one office unit on the second floor.

the deal comes with an empty buildable lot, and about 30 parking spaces in the rear.

building is reo, and has been bank managed for years. 

they were advertising it at a decent psf price, but they were promoting it as being almost twice the size it actually is.

they were asking about 425k for 10,000 sq ft

it is only 5200 sq ft of rentable space-3 storefronts and an office

the buildings are rented at 3600/mo modified gross with 2-5 year leases. 

taxes are 13,000

all commercial spaces rented, office has been vacant for several years. 

from my analysis, at 260k it gives me 8.3% cap at 1.36 dcr, and if i can get a tenant upstairs, i can add additional income to increase these numbers.

@ 260k, it is still more per foot then they were asking. 

@ 219k, i'd be at their asking price per foot. 

they seem to think upper 300's, low 400's are the magic number.

295k with 20% down seems to be the top number to squeeze in 1.2 dcr

I'd like to offer 210-235k 

my goal is income first, value add second- so if the numbers don't work on income-i'd rather not waste my time.

what would you offer, and where would you start negotiating?