Investor · Paradise, CA · Member since 2015 · 102 posts · 15 votes
Hi
I am unfamiliar with commercial property and there is a mechanics garage for sale. I’m interested in it.
It is located in a small town of 3k people or so.
What factors should I be looking at?
I tried to comp it but there is only retail space showing for lease. Retail space is showing for $5 per foot. This garage is 3k feet. Asking price is 420k
It’s vacant so I’m wondering if I can even get a loan on it and is it a wise investment?
Lender · Thornton, PA · Member since 2014 · 106 posts · 56 votes
6y
Whats your plan for the property if you buy it? why are you interested in the property?
Since it was a mechanics garage do you have an understanding of the environmental conditions that come with this type of asset? Underground storage tanks, chemical seepage into the ground, etc... If you buy the property and there are environmental contaminants they would become your problem and it is not cheap to have them re mediated. If you are obtaining bank financing, the bank will more than likely want an environmental study performed, these studies can cost $1000's of dollars depending on what is discovered on the property.
Is there a need for this type of property in the community? What can you convert it to if there is a higher and better use and what is the cost to convert?
Why is it vacant and why is the owner selling?
You could contact a local reputable commercial broker and determine if this property truly has value but do not waste their time, if they help you then give them the listing to lease the property if you end up purchasing.
Lender · Thornton, PA · Member since 2014 · 106 posts · 56 votes
6y
Whats your plan for the property if you buy it? why are you interested in the property?
Since it was a mechanics garage do you have an understanding of the environmental conditions that come with this type of asset? Underground storage tanks, chemical seepage into the ground, etc... If you buy the property and there are environmental contaminants they would become your problem and it is not cheap to have them re mediated. If you are obtaining bank financing, the bank will more than likely want an environmental study performed, these studies can cost $1000's of dollars depending on what is discovered on the property.
Is there a need for this type of property in the community? What can you convert it to if there is a higher and better use and what is the cost to convert?
Why is it vacant and why is the owner selling?
You could contact a local reputable commercial broker and determine if this property truly has value but do not waste their time, if they help you then give them the listing to lease the property if you end up purchasing.
I am unfamiliar with commercial property and there is a mechanics garage for sale. I’m interested in it.
It is located in a small town of 3k people or so.
What factors should I be looking at?
I tried to comp it but there is only retail space showing for lease. Retail space is showing for $5 per foot. This garage is 3k feet. Asking price is 420k
It’s vacant so I’m wondering if I can even get a loan on it and is it a wise investment?
I appreciate and advice!
You can get a 50% LTV (bank value, NOT what you may pay) loan even if its vacant. That said with this use, they will deduct a healthy remediation cost due to that risk. If that cost is greater than their equity, they won't do the loan.
Is it in California? Double or triple your costs and you'll see why no one is buying it...
I am unfamiliar with commercial property and there is a mechanics garage for sale. I’m interested in it.
It is located in a small town of 3k people or so.
What factors should I be looking at?
I tried to comp it but there is only retail space showing for lease. Retail space is showing for $5 per foot. This garage is 3k feet. Asking price is 420k
It’s vacant so I’m wondering if I can even get a loan on it and is it a wise investment?
I appreciate and advice!
Sounds like an aggressive price for what you describe.
Investor · Paradise, CA · Member since 2015 · 102 posts · 15 votes
6y
@Kevin Dougherty I am trying to find an alternative to SFRs. Prices are very high here. The average house is probably 350K and would rent for 1400 or 1500
Is there a need for this type of property in the community? --> Honestly its probably not in high demand right now. The entire town burned down, pretty much decreasing the population by 90%. Im hoping to get a deal on it.
What can you convert it to if there is a higher and better use and what is the cost to convert? -> Yes I was thinking about this.. Its mentioned in the realtor notes. To possibly make it three separate roll-up door units.
Why is it vacant and why is the owner selling? -> The town burned down. Probably lost of business. The town had 35K population. Now its about 3k population
Sounds like an aggressive price for what you describe.
I was off on the numbers... price is 400K. The listing agent thinks it would lease at $1 or 1.25. The Square footage is close to 3600 ft, but I'm not sure of the usable space. So I'll assume 3000 usable, which would be 3K per month ( minus taxes insurance vacancy) for a 400k investment
Septic could be problematic since oils and cleaning chemicals could be discharged and then leach into soils/groundwater. U would be well advised to have samples analyzed before committing to purchase this property. Perhaps negotiate a due diligence out....
I would stay away from that deal. With a town of only 3,000 people the odds of you getting a tenant are very slim. On mechanic type garages/service type provider buildings, I would not operate in a market of less than 15,000 people.
New York, NY · Member since 2019 · 155 posts · 58 votes
6y
since the property is on septic, you may want to collect groundwater samples to make sure contaminants have not escaped from the septic.I have come across many sites that were contaminated by fluids, oils, etc. disposed into the septic system. Floor drains in the garage could be connected to the septic system