Warehouse investment

[LIBCAN]

Looking for ideas on a warehouse investment:

I just bought this run down warehouse just because the price was a joke. If I sell the land only I`d probably double my money, but that is not the plan. The building is basically made of bricks and used to be a factory for making steel, etc. It does need a lot of work which I can do all no problems. My dilemma is what can I use it for? It is located in a really small town and renting it out might not be possible because I don`t see an opportunity for any business that needs such a large building. I was thinking to fix it up and rent it as storage units rather than one building. Someone else told me to fix it in a way I could rent it out as a garage to store vehicles in the winter. I just think there must be more options out there.


Any ideas would be appreciated.

 

[housingrental]

More info needed for anything approaching a meaningful answer

 

[Rickson9]

You bought an asset without knowing what to do with it?



You should see if your assumption of being able to sell the land for double your money is actually true or just a figment of your imagination. List it for double until you figure out what to do.

 

[LIBCAN]

[quote user=housingrental]More info needed for anything approaching a meaningful answer



What info would you like to know? Imagine you have a warehouse in a small town. What can you do with it? It is about 70x60 brick walls and concrete foundation. It has power, heat and water. The property needs work which means I could remodel it in any way I want. I can make offices if that is the intended use of it or storage units or whatever it is going to be used for.


Just looking for more ideas, maybe the ideas I listed above are the limits!



[quote user=Rickson9]You bought an asset without knowing what to do with it?



You should see if your assumption of being able to sell the land for double your money is actually true or just a figment of your imagination. List it for double until you figure out what to do.



It is not an assumption. It is a fact. This actually might be a rare opportunity which is why you see it as an assumption. So here it is since you asked:


The place used to be owned by a company from Europe, they have left about 5 years ago and it has been vacant since then. The property is appraised for about $60k. It was going to go on a tax sale but with some connections I managed to pay those fees and own it. I paid $7k for it. Don`t ask me why it was not sold publicly, very long legal situation and the county just wanted the tax paid. Now you think this is a great deal! Not yet...there was some old machinery and scrap metal, copper etc that was left in the building. Guess what I SOLD all that for about $5k. And when I say I could sell it for double I guess I lied cuz the real figure is 30 times more.


I did not buy this to just sell it. I believe there is a use of this building which is my question to all here

 

[Rickson9]

That sounds like a pretty sweet deal. Grats!

 

[Thomas Beyer]

The reason it was cheap is the lack of demand for a certain product, I.e. factory or large warehouse or storage. It MAY work well as mini-storage, or covered truck or RV parking, a car wash or a horse stable.



Therefore, ask around locally and within 50 km to see what might be in demand. Small towns have very high vacancies and very low prices for a reason.




Did you do a environmental assessment ? It may be so cheap because the soil is contaminated due to former factory. I hope you bought the asset in a corporation and not personally, as otherwise you might be personally at risk for major environmental cleanup costs !



For the right entrepreneur (like you) it may be a gold mine if you find the right tenant(s) after some extensive market research.



Think creatively: who would drive there from 30km away ? Is there a major highway somewhere ? Farmers ? Oil companies ? Manufacturers ? Campground ? Regional/National Park ? Mine ?

 

[housingrental]

If you do not know your market, and it's a small town, I'd sell

If you want to keep it - research the local market in detail first prior to spending $'s

A good first few calls would be to the town council, staff, and commercial realtors for what they'd like to see on the site / their thoughts on what there is unmet demand for

 

[Thomas Beyer]

[quote user=housingrental]commercial realtors


Chances are, if it hasn't sold for years, that the local boys didn't know what to do with it.



You need a bigger perspective than the local folks to see potential in many instances !



I looked at a defunct hospital once in a small SK town, for sale initially for $1M, then $500K, then $250K .. and I concluded that $1 is overpaying for it due to environmental liabilities, taxes payable and tear down costs.



Every asset comes with an obligation / liability. Asses the upside and the downside, then decide.



So it may be a good $7000 investment .. it may not.



Why not rent it for $800/month, "as is, where is" .. and do nothing more.



or change of use to s.th. that is in demand in the wider area: Secure, indoor cheap RV storage comes to mind. Put a sign on teh nearest highway and send letter to RV parks & campgrounds in a 150 km radius.



at $100 per RV per month it might be a great low cost income stream !

 

[LIBCAN]

Thanks Thomas for your great input. I actually bought it in the business name to avoid any hidden issues like you said. I also did my extra 10% homework and met with the local authority/lawyer to make sure there is no environmental problems with the property.

I visited the town today and asked few people and businesses about warehouse demand. What they needed was actually just like you said. RV parking, motor bikes winter storage, etc. so thanks again for your advice.