Oh boy, do I need some help from commercial RE experts!

[Collin Hays]

So I have been in the process of preparing to build a basketball/volleyball gymnasium to rent out.  The total cost is set to be around $450,000 including the land.  We are pretty far along in the planning on this though we have not broken ground.

Meanwhile, I came across an entire private school campus, complete with football field and gymnasium, that is for sale for $1.1 million.  This is a very old campus, built in the 50s, that is full of asbestos.  The gym is fine (kind of rough though), although it needs roof work and perhaps HVAC, and a new floor.  

The private school that owns this has moved to a new campus.  They still use the football field at this old campus for their football games. 

Well, I talked to the board member in charge of dispensing of the property and I told him "I don't need a campus, I just need a gym...and I am building a brand spanking new one for about $450K."  He said "We may be able to work something out...let's meet up and let me show you this gym."   I gather from that, that times are tough and the school could use some cash.

That tells me they are willing to consider an offer way less than $1.1 million.  And they should - there is zero market for an old dilipidated school campus, especially in these times when buildings everywhere are empty.  And they cannot separate the gym from the rest of the RE - it's a package deal.

So I have some questions!

- If I bought the whole deal for say $350K, and then I have to spend $100K on the gym to get it up to snuff, I still own a school campus with asbestos.  Would I have the whole thing razed?  What would it cost (roughly) to raze 10,000 square feet of single story space?

- What if I proposed a year to year lease with them at $2000 a month for just the gym?  But if they sell it, I'm suddenly without my gym.  Who pays for utilities if I lease it?  

- I will need to spend $30K on proper flooring for the gym.  If they sell it in 6 months, I've lost all my money.  Could I ask them to reimburse me the cost of the floor if they sell it?

- I told them that if I bought it, I would give them unfettered access to the football field and locker rooms next to the gym at no cost.  They seemed really excited about this.  

- Right now the tax appraisal on the complex is $1 million.  If I bought it for say $300K, would I have a case to take the appraisal district to get the new value at $300K?  Or does it work like that?

- Does the asbestos in the classroom part of the campus present me with any liabilities if I'm not using it?  What about if I'm renting it out to someone?