Warehouse in a black town? Buerste?

Been looking at finding some investment to make. There is a big liquidation auction coming up. Some CNC/screw machine company is
bankrupt.
Along with it, a warehouse is offered for sale. It is actually big, 19,000 square feet (not a typo) on 1.4 acres of land.
The building is in good condition. The starting price for the building is 200,000, which works out to slightly over 10 dollars per square foot. For those who have not been buying and selling warehouses, this is a very cheap price. (but see below)
This building is being currently marketed by a real estate firm and the asking price is $299,000.
There is no evidence that there were any recent breakins into this building (all windows are intact, old and dusty).
The building is located in a town (Dolton, IL) that is 81% black.
I compared crime stats of Dolton and Naperville, which is a big city next to me. Some crime rares are about same (murder) but some (such as burglaries) are about 4 times higher.
I drove around the area a lot just to get a feel and my feel is that it is not a very high crime area. (houses are maintained, shops not boarded up).
This place is 1 hour away from me.
I am not even sure of basic things, like will I be required to give bribes to everyone, how will police treat me, will I be asked to pay for protection to gangs etc.
But in any case, while I am considering making a low bid, I want to make sure that it does not become an expensive educational project in how not to invest in real estate.
Any thoughts on this situation?
i
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Forgot to add. This is a sealed bid sale.
The building is owned by an "investor". This "investor" bought it in 2008. I looked up some online stuff on the Cook County recorder of deeds website. It was bought from MB Financial and all I know is that there is currently a 238,000 mortgage on it. So if I, say, bid $205k it would be even below the mortgage. I realize that the possibility of such a low bid (which is still hypothetical, I did not yet bid), is low, but that's how I operate, I submit low bids.
I talked to this investor. He told me that he was getting $15k/month in rent. However, the company went bankrupt a year ago and so he only received that amount for a year. And this is if I was to believe his number. I am not sure if I would believe it, as it sounds a bit good to be true wrt the price that is being asked.
If I can get, say, $2 per square foot per yeat triple net, then it would amount to $40k/year, which is almost 20% return. That seems pretty doable.
But I have no experience dealing with problems such as breaking etc.
i
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Mon, 13 Sep 2010 08:24:41 -0500, Ignoramus20659

I'd guess the biggest issue is finding and keeping a good tenant. How's the state of small manufacturing in that area, picking up or declining? Other people that use warehouses typically service industry, so unless the manufacturing economy is expanding there....
Pete Keillor
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

I agree.

It is a good question, if it is like in the rest of Illinois, it is neither declining nor expanding. Manufacturing is all kinds of things. For example, making dog food or peat moss is manufacturing.
i
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Pete Keillor wrote:

And the problem with that is that most good tenants are looking for bargains like this building.
I'd buy something comparable in a second for my business in a second.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Ignoramus20659 wrote:

Tax and insurance load would be my big concern. If you are looking to do this without a mortgage, then at least that's one less expense to worry about when the building is vacant. You'd still have taxes, insurance, utilities and maintenance to take care of when the building is vacant, so it's important to know what your worst case monthly expenses will be while trying to find a tenant. You should also investigate the costs of having a professional commercial property management company manage it for you. The cost of such management cuts into your profits, but a decent management company can go a long way towards keeping the building occupied and avoiding some problems.
As for the neighborhood, the racial makeup of the area is far less important than the character makeup of the area. If it is an area where people maintain their property, and particularly an area with mostly single family houses that are reasonably maintained, it's likely a good area.
What do you figure, section off 4k sq. ft. for your own use and lease the other 15k?
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Definitely without a mortgage.

Taxes are 31k per year, but supposedly were just reduced due to unoccupies status. The owner will send me some paperwork today.

That would be good if that would free up my time.

Yes, it did seem to be this way, maintained single family homes. Not mansions to be sure, but painted, clean, streets not full of garbage etc.

I might do that, the building does have two sections. It is kind of far from me to use on a regular basis (50-60 minutes drive).
i
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Ignoramus20659 wrote:

Don't forget insurance. The commercial insurance you will need (and plenty of it) is *not* cheap.

That's a pretty routine trip for me, I'm about from Dallas. I do try to organize my trips so I get a number of things accomplished each time I go down, but it's not a big deal.
Another thing to check carefully but before purchase as well as with prospective tenants is environmental. You don't want to buy a Superfund site, or even something that will require smaller remediation as even tiny remediation is $$$$.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

The owner says that his 2008 environmental report is clean. Village of Dolton does not have anything disparaging. The place looks relatively clean.
i
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Ignoramus20659 wrote:

That's good, but don't forget to check on insurance, you may find premiums are a lot higher than you might think. And you certainly don't want to get into this without proper insurance, particularly commercial liability.
If you don't already have one, you should also be looking for a "PLUP" personal liability umbrella policy, those are pretty inexpensive and can be very helpful.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

I cannot get that amount out of the owner, it seems.

I have something like that, yes.
i
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Mon, 13 Sep 2010 15:51:16 -0500, Ignoramus20659

Good looking building. Late 50s early 60s construction but well taken care of.
Im not a big fan of the trees to the rear..but then Im from California and thats simply no more and no less than a huge fire danger here.
Say..how much did that OmniTurn go for ?
Gunner
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

They have not sold it yet. Wat do you think it is worth conservatively?
i
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Mon, 13 Sep 2010 16:13:51 -0500, Ignoramus20659

$12-19k depending on what drive it has in it.
http://shop.ebay.com/?_from=R40&_trksid=p3907.m570.l1313&_nkw=omniturn&_sacat=See-All-Categories
Gunner
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Mon, 13 Sep 2010 16:13:51 -0500, Ignoramus20659

That is a C axis machine and should be worth $15-19k ish as it appears to be a fairly recent model, probably less than 6 yrs old. 10 at the oldish
I just reviewed the pictures and zoomed them and it looks pretty fair.
Call the factory and give them the serial number off the back of the control and they can tell you the date it was shipped
C-axis means the spindle is servo controlled and is not only for turning..but is positionable, so you can use live tooling and do bolt patterns, cross drilling etc etc to .4 degree
Make parts like this....
http://www.omni-turn.com/Pages/Examples/OmniSamples.html
Gunner
Gunner
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

I do not like their potential use as a drinking and raping place, or a drug selling place, from a liability standpoint. But the woods are good as a lunch place.
A few hours with a chainsaw and a mower would do wonders.
Let me know what the omniturn is worth in your opinion
i

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Sep 13, 1:51pm, Ignoramus20659 <ignoramus20...@NOSPAM. 20659.invalid> wrote:

Nice looking building. Well maintained. I see the floor is pained or epoxy coated concrete. Easy maintenance. Also the roof construction is too light for a wet fire sprinkler system ( one always filled and ready to go). However, the roof is sheet metal with probably sprayed- on coating. should last for ever. Does the office area have the same roof construction? When you get serious, have the listing agent bring a ladder and go with you to check the roof and water scuppers on both the main building and the office area.
From the outside, there appears to be a later addition to the back end. Wonder about that.
Another avenue of investigation is to check the building permit history for the property. Either city or county will have that info. They can also clue you into the cost of permits for modifying/ upgrading the building for your purposes, like the partitioning. The permitting cost may be significant, but you may be able to talk them into reducing the cost when you actually get to changing things.
I see a similar building in the background. you might get friendly with the owner/land lord of that building and pick their brain for answer to some of your questions about the neighborhood.
Such fun. Kind of like looking for a wife!
Paul
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Paul, I think that I will submit a bid. I obtained a cashiers check for a 10% deposit that would accompany the bid. I have not actually submitted it though.
i

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Mon, 13 Sep 2010 15:51:16 -0500, Ignoramus20659

Someone suggested for you to make thumbnails since the pics were so large. After trying to view the first one, I'll concur. It's aking so long to DL the pic I wouldn't want to try to view all of them. It would take an hour...on DSL, no less.
Do you get the Omniturns, Swiss screw machines (?), and other inventory, too? TAKE THE DEAL! <g>
-- Not merely an absence of noise, Real Silence begins when a reasonable being withdraws from the noise in order to find peace and order in his inner sanctuary. -- Peter Minard
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Polytechforum.com is a website by engineers for engineers. It is not affiliated with any of manufacturers or vendors discussed here. All logos and trade names are the property of their respective owners.