New Member - Commercial DT Rehab- Northern MI

[Gary Andres]

Hi everyone, joined BP last year for all the freebee calculators and finding myself a bit over my head and in need of some advice...

Have a commercial property bought on land contract, 0 down, 5%, amoritized over 30 years with 6 year balloon for 120k last year. It is in a northern MI Downtown area (opp zone) in a county seat with 2 hospitals, had it re-zoned to mixed use, and is considered blighted which makes it eligible for MEDC funding of up to 50% of project cost.

It is 8k sqft (4,000 each level) with the lower level being a walkout (top level is street level with sloped drive down to the rear of the building). Put a new commercial roof and did mold abatement and full demo of everything inside so i have ~80k into it.  Plan was to do self storage; then found out the creek that sits a ways back flooded 5 years ago, not in a floodzone but all the locals know so self storage is a tough sell at this point. 

Thinking of either making it a 4 -7 plex catering toward seniors who retire to the area, want the walkability of a nice DT area, golf, outdoors etc and need a summer home up north close to hospital systems etc. Other option is to continue down the self storage facility path, do nothing, or list it. 

Architecture did a design and well respected contractor estimated the buildout of 4 plex would be an additional ~800k for total project cost of ~1M. it would be ~1.2M for the 7 plex.  Keeping with the 4 plex scenario, State funding via MEDC pitching in 50% of that 1M  (500k) once the Certificate of occupancy is received. Bank would want 20% down (200k) and the State on board prior to releasing funds for buildout. I would also get a 1099G for whatever grant was received so not exactly "free" but could be offset other ways potentially. 

Rent would be ~1,400 to 1,800 / month which is above market rate but housing is in very high demand and price is in line with what seniors who live on their own would be willing to pay based on my conversations with local Real Estate Agents. 

This pivot just seems crazy risky so I listed the property while I'm analyzing this further.

Any people who have worked through the grant process in MI before who can weigh in here on other considerations? At this point I'm trying to figure if I should try to bring in an experienced partner to de-risk this build out or scrap the plan altogether and sell. 

[Ezekiel Ayers]

Hey, I don't do commercial real estate but I could connect you with a person who does here in town and they might be able to help.