Advice for a bad Commercial Property

[Chris Nance]

Hey BP, my grandmother bought this property for my uncle to start a business. Long story short he ran the business into the ground and now my Grandma is hemorrhaging money on taxes every year for this thing. It is all paid off, but has not been generating any cash flow for the last several years.

It is located in Kearney MO. Right off the interstate, tucked up in an industrial zone, and across the street from the Kearney Police station. For out of state people who follow the sub forum of Kansas City, Kearney is right outside Liberty MO which is considered a big suburb of Northern Kansas City. 

My family has tried to list it with a Real Estate agent, but no luck. There is at least $500k invested into the property including the lot, structure, and restaurant equipment inside. Since I am just starting in the Real Estate game I am trying to gain experience so what better way than try and help Grandma out with getting some cash flow through the door. I'd like to keep it in the family by finding a business to lease the lot and building out. How do I go about doing that? Compiling a list of local vendors that would be interested. The only problem, as you can see from the pictures, the building itself is a horrible pink with an ugly design. I can't think of any business that would want to take this over as a lease. Would it be a viable option to put some more money into remodeling (taking out the roof, gutting the inside,etc).

What do you guys think ? Remodel and try to rent out to a small business in the area? Or taking more of a loss and selling it to a low ball offer? 

[Chris Dawson]

@Chris Nance don't spend any money remodeling the building, unless it is a safety issue (leaking roof, stairs that are falling apart,...).  Commercial property doesn't have to look pretty to sell.  Anybody interested in leasing the property will know that they can negotiate any improvements that they want.

From the photos and your comments, this looks like it used to be a restaurant.  That location is definitely not the best location for a restaurant, but it would be a great location for a lawyer, CPA, title company, Dr's office, or something similar.  Those are the types of businesses your agent should be targeting.

Your lot looks very large for such a small building.  Have you checked how much the land is worth?  Would it be worth more without the building?

One more thought, you mentioned restaurant equipment inside the building.  That stuff is usually pretty expensive.  Have you tried to sell any of it?  There is a huge restaurant supply store in the West Bottoms in downtown Kansas City.  I don't know if they buy used equipment, but I'm sure they could put you in touch with somebody who does.

Good luck.