What AM I Thinking?? HELP I'm WAY Out Of My League..
I know NOTHING of commercial development, I'm just trying to find an easy no money flip. But what I found is this: VERY upscale neighborhood for EONS, big lots, big trees, builders coming in and tearing down the old $300,000 houses and putting up half-mils. 1.12 acres CORNER LOT on busy intersection, across the street from big hospital and medical center AND about 1/2 mile from ANOTHER hospital. Realtor just put up sign has it posted online for $339K. House built in 1900 !! WILL be torn down by someone. Of course I'm thinking PERFECT place for a Walgreens! The Script volume alone from two hospitals, but there isn't a Walgreens within 5 miles, (by my house there are 4 within 5 miles!) What I have found so far is that it is in a LITTLE unknown municipality of 284 people. Just about 1/2 mile down the road is the Country Club. Zoning online says it's unincorporated and Municipal ?? AND I have no money but my brothers may help with some initial funding we might be able to scrape up $50K. BUT what to do? Try to contact Walgreens? Go to the "trustees" of this little community? Do we have to? If there is a hospital across the street and a country club down the road, does this mean that zoning would uphold a commercial endeavor? How long would something like this take? Are our meager funds to small to try this? Should we just get an option contract and try to re-sell to some home builder that's been redoing homes in the area? OR should I just scrap this crazy idea and stick with trying to find a motivated seller to flip a property and STOP dreaming?? ALL suggestions, comments are really welcomed. THanks in advance, Kathleen.
Here are some points to ponder.
You are talking about being a developer and a retail owner.
First is the land zoned for what you want to do, and if not could it be?
Can you purchase a drug store and build it and run it? Most of those stores are run by companies that own multiple units across your state. You might have more luck approaching one of them before you would ever qualify as an unknown with the actual parent company.
Franchises and company stores in that league are not given to just anyone. It is like getting a Mcdonnalds. You need credintials before they will every consider you. You need net worth and more importantly experience in doing what you want to do, unfortunately how do you get the experience when they won't give it to you? You can't. Companies like that have a lot to lose, so they go with known entities with track records which will guarantee them success when dealing with new stores.
The approach I would see is first to find out what it would take to get the store in place. Could you do it yourself, or would you only be able to have the existing company put it there.
If there is some type of gurantee that you could get it built there then you would option the land for a certain amount of time and sell it to the company that ownes the store you want built there and make your profit that way.
I will have to say that any piece of property that is commercial with as many attibutes as you say 340k is very, very, very low. Really desireable locations can reach close to 1 million very quickly. so that low price you can get this land for really sends up a red flag that there is really that much potential for what you want to do.[ Edited by The-Rehabinator on Date 01/15/2004 ]
Thanks for the reply Rehab. So at the end, you are saying that because they are asking so low that it probably can't be zoned for commercial... So that would leave trying to option it and find a builder to flip it to. OR if it can be zoned for commercial, it's a great deal... How do I find out if it is or can be zoned commercial?? who do I ask? The trustees of the municpality which is only the people in the subdivision??
I am a raw land agent as well as doing a lot of townhome/SRF development. What do you mean by the municipality of the subdivision?? Are you refering to the homeowners association? At any rate...
Before you talk to any future buyer you need to get it under contract with full contingencies...90-120 day feasability study period, possibly rezoning, financing, etc. Before you get it under contract I would pay a visit to the community development dept. of the local governing authority (city or county), and confirm the existing zoning. Get a list of the allowed uses for that zoning district, minimum lot size, setbacks, builiding sizes, etc. This will tell you if you can subdivide it for several residential lots. As well, ask them what their future land use plan shows this property being zoned as. If it is commercial then rezoning should be fairly easy. If not, then maybe rezone it to higher density residential and use for town homes. Also confirm if sewer and water service are available and if the size lines are adequate for what you could do on the property. To answer all of those questions should only take an hour or so of your time. If it looks good then go for a contract with plenty of clauses in there for you to get out. I usually don't even have closing dates in my contracts since closing is so tied to my contingencies. You could do a contract prior to answering the above questions but in my opinion that is a waste of everyone's time. As well, knowing the above information gives you some knowledge to negotiate off of. Don't forget to find out when the seller bought the property and how much they paid for it too. Key data to have when negotiating!
If you do all of that and then get it under contract, if you want to flip it you can present a decent package to a future developer for them to consider. Oh yes...don't forget to make sure it is specifically stated you can assign your contract!
Good luck
1. Get it under contract and make sure the contract is assignable
2. Do the due dilignece - ask for a very long one, by the way. Check zoning AND get a civil engineer to do a preliminary site plan - you need enough parking and entrance/exits. Due diligence should cost you 3 -5 grand
3. Get a commerical broker involved that knows the retail market.
4. Flip your position and get out and let somebody else drive this home. You should be able to do all of this with little money and some shoe leather.
There are developers that specialize in serving the Walgreens of this world. Walgreens is not your customer, these developers are.
Gregg
_________________
Gregg Fous
Investor/Developer
"Under-promise and over-deliver"[ Edited by GFous on Date 01/16/2004 ]
You guys are SO awesome! Thanks for all the info!!
GFous you noted that due diligence may run 3-5 G's. Do I do spend this if I'm just going to assign and let someone else finish it? or was your comment:
"4. Flip your position and get out and let somebody else drive this home. You should be able to do all of this with little money and some shoe leather. "
a different option than #s 1,2 &3??
Thanks again guys! keep up the good work!
Do the due diligence ( I would, anyway). This will increase the value of your property ( assuming the results are positive)
[addsig]
Walgreens and the like have certain specifications for where they will build. 248 persons in a town seems way to low for a franchise to consider the spot. I believe Walgreens requires approximately five acresm CVS requires 3.5, etc. For whichever franchise you're thinking about, check out their websites and see what their specifications are for considering a site.
Murtishi, the 248 is just the # of folks in this particular little municipality, it's own little city, smack dab in the middle of St. Louis. Trust me, there are enough people plus the two hospitals within 1/4 mile to keep ANY establishment busy!! But that same municipality is what makes the deal tough. OLD folks in an OLD neighborhood, who probably don't like change, in any form. I guess instead of 'fighting city hall' literally, I'll just try and flip to a luxury home developer in town. THanks!
Try to put the property under option first. Then do your due diligence.Find out what the highest and best use is for the property www.is.The property may already be zoned commercial since from your description everything around it is institutional/office or commercial.
Kathleen,
Check your private message inbox! I did not see your note at first but you now have a reply!