I found a hidden treasure need advice on how to extract it

I found a hidden treasure need advice on how to extract it

Property Manager · Cleveland, OH · Member since 2015 · 11 posts · 2 votes

Ok so there's a vacant hotel in a Cleveland suburb. The hotel and the suburb will remain nameless because it will be easily given away to those familiar with the area.  

This is an old hotel built in the early 70's it's over 100,000 square foot and has changed handed multiple times in the 2000's and in the past 5 years it has been shut down by our local government because there was a lot of illegal activity going on there. 

The reason this is a hidden treasure is because in the early 2000's it went through a complete renovation,  and one of those renovations was a complete electrical overhaul, which was contracted out to my uncles company.  Now there's only 2 other people besides myself that know what's inside the walls of this hotel: 400k+ worth of scrap copper wire plus. Several hundred thousand dollars in hvac, brand new airconditioners, electrical components as well as 50k in kitchen equipment.

So with all that being said I know the parcel number on this property as well as it was last sold in 2013 but it has remained vacant and absolutely no one has done a single thing to the property the police have sealed it up.

My questions are:

How do I look up the current owner of the property? Can I use it searching the parcel nubmber at the courthouse or something like that?

How can I find out if the property has been condemned, can it still be purchased even though it was shut down by police?

I want to make a lowball offer and completely gut all the scrap in this hotel, the local scrap yard is within blocks of the property so it would be a pheasable feat. With a small crew of guys I can gut the whole building in 30 days. I have designed a strategic plan on how to get the job done(won't go into detail on that just  yet).

Now once the building is gutted and scrapped it will essentially be a useless shell, now I only want it for its scrap value, how would I dump it/ get it out of my hands once I've stripped it clean. 

Profit = scrap value - (purchase price + gutting costs) 

I wouldn't care if I sold it for a dollar after I did the dirty work, could I just turn it over to the city and say I don't want it anymore? I don't think it would be that easy or would it?

Now all this could be for nothing, but like I said I'm one of few people with insider information on the hidden value in this building and I have the means to execute my plan. and I would at least like to know how to lookup the owner of a commercial property, all I have is the parcel number. So I could at least make an offer because it is just sitting there and I don't think it will ever operate as a hotel ever again.

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Apartment / Investment Broker · Cleveland, OH · Member since 2016 · 107 posts · 68 votes
9y

@Alex Gorges  With no disrespect meant, I suspect I am very aware of your hidden treasure.  The problem here is that the City will not allow a sale without an occupancy permit / point of sale inspection completed.  At its current state, an occupancy permit will not be granted and the City will require the new owner sign off on its new plans and renovation.   You will not be able to then "strip" it and sell it as you will ultimately be responsible for its renovation.  This property is on a lot of folks radar and the City will ensure that is sells to the "right" party.  You can certainly track down the owners using the County website and are easily found and try to do a under the radar deal with them but I suspect they will be hesitant to do anything as the Courts and City has directed them to do nothing at this time.  In full disclosure, if it is the property I am thinking of (near airport), then I would not be surprised if it becomes a car lot by one of the biggest car dealers in the area who is interested in the site.  If it is not the property I am thinking of, I suspect you will still have difficulty executing your plan without any City asking questions.   While I do not mean to rain on your idea, I do not want to see you get in over your head to a situation that can do some financial damage to you.  I am happy to discuss, feel free to PM me.  Good Luck!

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  • Real Estate Agent · Austin, TX · Member since 2014 · 636 posts · 486 votes
    9y

    Interesting idea. I've actually never come across this exact investment strategy. I'm assuming you already tried looking to the tax assessor? The info should be there, and chances are high that if it's been abandoned that long that they actually own it by now.

    Careful with the simplified math you did on the profit there; my own math would be a bit more involved. Back of the envelope I'd say it's something like this: Profit = scrap value + final sale price/land disposal cost- (purchase price + gutting costs + debt service + transaction costs (T=title, insurance, taxes, transporation, etc.). Obviously the full information would be necessary to come up with a good assessment.

    Additionally, resale tends to be significantly lower than retail. Are you being conservative enough on what you could earn from this? Scrap copper wiring goes for about $2 a pound (depending on type) right now, so it would take about 200,000 pounds of wiring to make that kind of money. I'm no wiring expert, but 2 pounds of copper per sqft. (based on your 100,000 sqft building estimate) seems unlikely. 

    Either way, is the the highest and best use of the property? Your post implies you think you could buy it for less than a half million; you really don't need to rent out much of the space to make that a cashflowing machine, provided the renovations aren't too crazy.

  • Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
    9y

    @Alex Gorges   People learn what a good investment is by researching many that are not good deals.  That being said, this investment will not work.

    Believe me building salvagers for 300 miles know about the building.

    I would not be surprised if the interior of the building has already been stripped.  This might have been done by the owners or by thieves.

    Normally in commercial buildings everything has a value.  There are places you can buy all kinds of salvaged parts.

    Some of the most common are...

    Doors

    Windows

    Sinks

    Light Fixtures

    Toilets

    Bathtubs

    Stoves

    Mirrors

    TV mounts

    AC units

    Lumber

    Generally speaking the city will make you remove any building if you can tell it has been stripped on the outside.

  • Full time investor · Cincinnati, OH · Member since 2013 · 405 posts · 312 votes
    9y

    I saw a guy implement this strategy in Illinois and made a killing.  @Account Closed is right, its hard to keep the contents a secret and many people probably know about this.  Don't underestimate the cost of demo and removal, easily a six figure job.  If there is lead paint or asbestos, there goes the profit.

  • Apartment / Investment Broker · Cleveland, OH · Member since 2016 · 107 posts · 68 votes
    9y

    @Alex Gorges  With no disrespect meant, I suspect I am very aware of your hidden treasure.  The problem here is that the City will not allow a sale without an occupancy permit / point of sale inspection completed.  At its current state, an occupancy permit will not be granted and the City will require the new owner sign off on its new plans and renovation.   You will not be able to then "strip" it and sell it as you will ultimately be responsible for its renovation.  This property is on a lot of folks radar and the City will ensure that is sells to the "right" party.  You can certainly track down the owners using the County website and are easily found and try to do a under the radar deal with them but I suspect they will be hesitant to do anything as the Courts and City has directed them to do nothing at this time.  In full disclosure, if it is the property I am thinking of (near airport), then I would not be surprised if it becomes a car lot by one of the biggest car dealers in the area who is interested in the site.  If it is not the property I am thinking of, I suspect you will still have difficulty executing your plan without any City asking questions.   While I do not mean to rain on your idea, I do not want to see you get in over your head to a situation that can do some financial damage to you.  I am happy to discuss, feel free to PM me.  Good Luck!

  • Property Manager · Cleveland, OH · Member since 2015 · 11 posts · 2 votes
    9y

    Thankyou all for your imput, I have been spitballing this idea for a while so I figured I'd get a few opinions on this. Digging deeper into this I see theres going to be more complications and a bigger undertaking then I thought. So thankyou all for your help. 

    @Mathew King thankyou for your insight on this and it is the exact property your thinking of. I figured the same thing; that this hotel would eventually be leveled and turned into a huge car lot. 

  • Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    9y

    Gonna go ahead and guess were talking about the one on Brookpark Rd. 

    If the seller was ready to just liquidate there would be a line of suitors (I would be one of them) who would pay more than someone trying to make a profit scrapping everything in the building.

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