Hazardous Site. Am I Missing Something?
I am looking at a commercial site that has $33,000.00 owed on taxes. It is listed with superfund as a hazardous site. Superfund will be starting clean-up this month. Sale of property is in 3 weeks. Man at superfund told me he will sign a legal document saying new owner (hopefully me) will not be liable for any clean-up costs. City where property is located says the site is one of the most desirable in city after clean-up. Rough appraisal is 1 million. This sounds too good to be true. What am I missing. Yes, I would expect the city to try to bid also. Maybe not. Redemption period is 1 yr. Not too worried about someone redeeming. Just do not want to lose my investment, or end up costing me alot more in the long run. What am I missing? Thanks, Rick
why not track down the owner and just buy it outright? Even if you fail to secure the property, you'll definately know whether or not the current owner will try to redeem.
There is no reason so have 33k (or much more) sitting fro 1 year pending redemption.
Rick:
A couple of things you need to ask yourself. Why is it a Superfund site in the first place? What was the contamination? Is it something that is easily remediated (such as lead contaminated soil) or difficult and time consuming to remediate (such as contaminated groundwater, which could take years to clean up).
Will the clean-up be done "in-situ" which means the materials are stabilized, or decontaminated and left on-site, or will the contaminated materials me hauled off site? This could affect future buyer perceptions.
Once these sites are cleaned, up, they are typically referred to as "brown fields". These sites are ideal for future industrial development, but not for building houses/apartments. So you need to think about your exit strategy.
There is also the slight possibility of future liability. For example, there as an old shooting range where I live. A home builder built homes. Afterwards, the owners found high levels of lead contamination. The home builder had to buy back all the homes and clean up the site at the cost of millions. A little different than your superfund site, but I understand the home builder had the site tested prior to development. Afterwards they found the lead contamination.
So, while I don't know if you are missing anything regarding the actual superfund cleanup, there may be issues regarding your anticipated future use.
John
feltman,jwalko,
My plans are to sell the property as soon as I can. The property/building was used to make weed killer for the railroad at one time. The man at superfund said they planned to return the ground to "pristine" condition. The original owner has told them he is near bankrupcy, and cannot afford to clean the site. Therefore, superfund kicked in to do cleaning. City says they have 3-4 interested buyers. To buy the property for small amount, let superfund clean it at no cost to me, and city already has buyers wanting the property just sounds too easy. Any other thoughts????? Thanks, Rick
Also, I have tried contacting the owner. His wife says he wants nothing to do with the site. He just wants to be left alone. Would not discuss selling, giving or anything. Rick
The key here is to strike a deal with the owner. There is no other way unless you wait for the auction (auction = competition).
I think the key here is getting the wife to like you and then she gets the husband to talk to you.
For the amount of money you stand to make don't be cheap. Hire an environmental attorney.
Good Luck.
feltman is right on. contact the owner you said he was goin into b/k you maybe able to strike a good deal with him and cut out the comp. from other investors and if he doesn't want to deal, which is unlikely since he is going to lose it anyway, you will get useful info. to use in the deal.....kenmax
Indicator--(MO)----------------
You Say: "City says they have 3-4 interested buyers." You won't be selling to them after buying at the auction, I think. Those people will show up at the auction and bid.
I know it is tempting to get a huge homerun, as this seems to be. However, unless every other investor around does not do the research you have done, you don't have a chance, I'd bet. Ask the city people if those potential buyers know about the tax sale. Ask the superfund clean up people if they have discussed this property with other people besides yourself. Ask them what sorts of questions the other potential bidders asked them. You might learn something that you forgot to ask.
Good Investing**************Ron Starr************
I would stay away from superfund sites. I used to work for a environmental engineeing firm. and the cost for cleanup can get enormass.
give this a try
http://www.cityofchicago.org/Zoning/
great post, thanks