Shop rental

[BigBlueIron]

Looking for advise from the masses.

I have the option to buy the building my family ran their business from. I do not intend to continue with their business model. The building is quite large @ 10000 square ft and well setup with 9 bay doors all 14' high by 12' or 14'. low voltage 3 phase power through out, excellent concrete floor with full length drain and wash pit in one bay, and fully plumbed for air supply. With an additional 5000 ft for office and showroom area. Was originally a car dealership built in early 70's.

My dilemma, I have a good day job I would assume keep taking in the cost of insurance these days. This shop is where I have all my stuff tools, hot rods etc. So I would need to build a shop if I don't buy this one. I use about 1400 square ft. I also do side work here for hire mostly pick and choose my jobs with quite a bit of heavy truck repair for side money.

To justify buying I would need to rent or lease the rest out, I have no idea what to charge for space. This is a very rural area in a very poor county. Can anyone give any real world expertise as what is real price. Not looking to get rich but I don't want to cut my own throat.

One example is the local school is looking for a place to wash buses in the winter months, I have the perfect bay to do it over the wash pit including Hotsy pressure washer. They would need about 1400ft 50x28. So I would supply everything besides the labor or any chemicals/soap. What would this be worth a month?

[gregaba]

It would help to know local conditions as to rent-lease costs.
I leased my 20,000 sf warehouse when I still owned it for $6500 per mount. they paid all bills-insurance and did the upkeep to my specifications.
For a new building to do the work you are doing would cost [my guess] around $20,000 up.
You could rent the wash bay to the school for say? $450.00 a month with the hot water washer if they maintain it. The Office could rent to a small business for $500.00 + per month.
That would pay your insurance. You could also specify that the renters-leasers pay the insurance cost for the part of the building they use with proof of payment of insurance shown to you each month.
I assume there is no mortgage on the building so you would still have space to do your work and still have a fair income for yourself.
You would have to charge more if you furnished the insurance.
You could bargain on the rent prices but start high and you can all ways come down.
Greg

[BigBlueIron]

Well that is part of my problem, I am ignorant to rental costs in this area. I do have my ear to the ground and I have a few friends that are in that market.
If I could get your scenario I would pull the trigger in a heartbeat. $0.32 a ft and they pay all the bills would be awesome!
A new building would be more than that as it would need to be able to fit an entire tractor trailer. Maybe doable for 50k so its not out of the question.
I like the idea of the renter paying for there area for insurance. If a fire or such happened they would have there own coverage and keep me in the clear and my insurance lower for the entire property.
No mortgage yet. I have not pulled the trigger still trying to talk myself in or out of doing it. But meetings with the banks and lawyer are scheduled.

[gregaba]

Good luck with your option's.
I know it is tough to figure between the 2 that you have but with the building being just about what you need then I would find it hard to invest in a new building.
When ever we had to open a new location and build a new plant we found that the projected cost were all ways about 20% higher then we had budgeted for. Just the way things work out.
Good luck again.
Greg

[machoneman]

Call a realtor, tell them of the place and plans and have them out for detailed discussion of local rents, your place's relative rental value and even potential sales price.

[BigBlueIron]

Thanks, that's what this so difficult I love this place, so much untapped potential. The way its set up a person can pull 4 tractor trailers in and have room to work on all of them at once. Drive straight through the shop, no backing out.

I had not thought about a realtor since its direct with family one is not needed. But I do know one and she is a mover and a shaker, hard working gal I'll give her a call. Thanks

[e philpott]

Sounds like a lot of " what if's " to make it work and that would be hard to count on at the end of the day

[Joe-JDC]

Careful with a realtor, she might sell it right out from under you, looking for the highest commission.  Joe-JDC

[FElony]

https://en.wikipedia.org/wiki/Net_lease   In particular, NNN.

[gregaba]

Felony
Good link.

Greg

[Falcon67]

I had not thought about a realtor since its direct with family one is not needed. But I do know one and she is a mover and a shaker, hard working gal I'll give her a call. Thanks

Commercial realtor, not a regular one.  Or a commercial real estate leasing company.  You will need a title attorney and a title company even if it's a family deal.  Paper work on that along with title insurance is not a DIY deal.   

Note that you would become "active" in a commercial rental setup as soon as you take possession of the property.  I.E. you can't homestead it LOL.  You'll be able (required) to depreciate the building and you should track any expense to the penny that deals with the property.  It's to your benefit on the tax side of things.  If you are not comfortable with things like Schedule Cs, Depreciation tables, cost basis, etc, etc, etc then you will need a tax attorney or an accountant with commercial property experience.

[FElony]

Felony
Good link.

Greg

Ssshhhh! Don't let anybody think I spend time trying to help out. Right, seat-seeker Doug?

[BigBlueIron]

Certainly a lot of what if's. If it was a small place it would be a lot easier, just so many choices and different avenues. In a world of which I know little. Maybe I need to think bigger..

I appreciate the link and advise. Anything and everything I do is going past my lawyer which has extensive experience in real estate, he is also the county magistrate. The local realtor i mentioned will have no chance at sale as it is not currently being offered besides to myself nor would she undermine me, she is a family friend. But she knows a lot of people with ties to money/business and likes helping out the younger people trying to get going.

[cjshaker]