The warehouse is gone. But the mortgage isn't.
September 3, 2012 10:47 AM Subscribe
My friend bought a warehouse in Florida. It fell down. Now he has a mortgage on a slab and some land. What's a way he can make enough money on this thing to cover his mortgage?
So a buddy of mine at the top of the housing boom got a deal on a Warehouse in Pensacola in a pretty good section of town for such things. He bought it with the understanding that a friend who was a contractor would be helping fix it up for him. So he got a mortgage on it and used his mom's home for an equity loan to pay for it.
The friend left. Structural problems increased. Half the building fell down.
My buddy demolished the rest building and now there's a giant slab and the dirt lot that goes with it. And he's paying 700 bucks a month in mortgage payments on it. He'd walk away but that would put his mom's house in jeopardy. So he's paying for dirt and a floor.
What are some out of the box ideas you have for making enough money to cover the mortgage on this debacle?
So a buddy of mine at the top of the housing boom got a deal on a Warehouse in Pensacola in a pretty good section of town for such things. He bought it with the understanding that a friend who was a contractor would be helping fix it up for him. So he got a mortgage on it and used his mom's home for an equity loan to pay for it.
The friend left. Structural problems increased. Half the building fell down.
My buddy demolished the rest building and now there's a giant slab and the dirt lot that goes with it. And he's paying 700 bucks a month in mortgage payments on it. He'd walk away but that would put his mom's house in jeopardy. So he's paying for dirt and a floor.
What are some out of the box ideas you have for making enough money to cover the mortgage on this debacle?
Is it near a stadium or similar thing that draws big crowds often? He could rent out space for parking cars - at five or ten bucks a vehicle it'll add up fast.
posted by cmyk at 10:57 AM on September 3, 2012 [1 favorite]
posted by cmyk at 10:57 AM on September 3, 2012 [1 favorite]
Except then you would need festival/concert insurance.
posted by quodlibet at 10:58 AM on September 3, 2012
posted by quodlibet at 10:58 AM on September 3, 2012
How big is the slab? The lot?
posted by blaneyphoto at 10:59 AM on September 3, 2012
posted by blaneyphoto at 10:59 AM on September 3, 2012
Put in a new building and rent out warehouse space?
posted by thirteenkiller at 10:59 AM on September 3, 2012 [4 favorites]
posted by thirteenkiller at 10:59 AM on September 3, 2012 [4 favorites]
Put up a fence and sell boat/RV long-term parking.
posted by thirteenkiller at 11:02 AM on September 3, 2012 [5 favorites]
posted by thirteenkiller at 11:02 AM on September 3, 2012 [5 favorites]
Parking lot?
posted by eatcake at 11:05 AM on September 3, 2012 [1 favorite]
posted by eatcake at 11:05 AM on September 3, 2012 [1 favorite]
If it's close to the airport, put up a fence, buy a van, and turn it into a Park N Ride.
posted by Ghostride The Whip at 11:10 AM on September 3, 2012
posted by Ghostride The Whip at 11:10 AM on September 3, 2012
Rent it out to fruit stands, food trucks, and Christmas tree stands.
posted by The corpse in the library at 12:10 PM on September 3, 2012
posted by The corpse in the library at 12:10 PM on September 3, 2012
Carwash? Rent it to a cell tower?
I seem to recall an AskMe about this very scenario. (Similar enough that I thought it might have been the same concrete slab.)
posted by hoyland at 12:49 PM on September 3, 2012
I seem to recall an AskMe about this very scenario. (Similar enough that I thought it might have been the same concrete slab.)
posted by hoyland at 12:49 PM on September 3, 2012
How the hell did he manage to get a mortgage without having adequate insurance on it?
That said, the answer here really depends on location and potential uses. In many cases, having a large empty slab could make it more valuable than a run-down warehouse (for a lot of commercial developments, they start by ripping out everything already there, and put up a cheap steel-frame shell for whatever purpose they have in mind).
If the area actually has a market for warehouses, he could build another one fairly cheap (with the land already zoned and an existing foundation, the building-proper will cost him less than a typical residential home). If the area has a high demand for office workers, this could work as an opportunity to lease out thousands of square feet of cubicle-farms. If the area has some significant attraction nearby, parking and/or open-air market space (them Floridians looooove their flea-markets!).
And if it has absolutely no potential... Let the bank have it. You can get empty lots of non-residential Florida land cheaper than the value of the dirt they sit on.
posted by pla at 12:55 PM on September 3, 2012 [1 favorite]
That said, the answer here really depends on location and potential uses. In many cases, having a large empty slab could make it more valuable than a run-down warehouse (for a lot of commercial developments, they start by ripping out everything already there, and put up a cheap steel-frame shell for whatever purpose they have in mind).
If the area actually has a market for warehouses, he could build another one fairly cheap (with the land already zoned and an existing foundation, the building-proper will cost him less than a typical residential home). If the area has a high demand for office workers, this could work as an opportunity to lease out thousands of square feet of cubicle-farms. If the area has some significant attraction nearby, parking and/or open-air market space (them Floridians looooove their flea-markets!).
And if it has absolutely no potential... Let the bank have it. You can get empty lots of non-residential Florida land cheaper than the value of the dirt they sit on.
posted by pla at 12:55 PM on September 3, 2012 [1 favorite]
Container Market http://dekalbmarket.com/about/
Get used shipping containers that people can outfit as stores.
posted by anon4now at 1:23 PM on September 3, 2012 [1 favorite]
Get used shipping containers that people can outfit as stores.
posted by anon4now at 1:23 PM on September 3, 2012 [1 favorite]
hoyland, this is the same concrete slab. I guess the cell tower idea didn't pan out.
Is said friend part of the local Chamber of Commerce or similar business owners' association? That might be a way for him to connect with potential space-leasers (the flea market idea sounds good, but it would be so much easier for him to partner with an existing flea market that needed a bigger space than to start one from scratch, for instance).
posted by Sidhedevil at 2:56 PM on September 3, 2012
Is said friend part of the local Chamber of Commerce or similar business owners' association? That might be a way for him to connect with potential space-leasers (the flea market idea sounds good, but it would be so much easier for him to partner with an existing flea market that needed a bigger space than to start one from scratch, for instance).
posted by Sidhedevil at 2:56 PM on September 3, 2012
Response by poster: Yeah it's the same guy from the cell phone tower. Apparently they have no shortage of coverage in the area. And so I thought I'd see if AskMefi could brainstorm some other options.
I actually checked the prices on some USED steel buildings and you can pickup between 10k-30K sqft of space in decent shape for around 18K if you're willing to haul it from the midwest.
I was just wondering what other options DIDN'T involve taking out a second loan to get the place up to snuff.
posted by rileyray3000 at 4:45 PM on September 3, 2012
I actually checked the prices on some USED steel buildings and you can pickup between 10k-30K sqft of space in decent shape for around 18K if you're willing to haul it from the midwest.
I was just wondering what other options DIDN'T involve taking out a second loan to get the place up to snuff.
posted by rileyray3000 at 4:45 PM on September 3, 2012
PARKING: if it's handy to the airport, then something like long-term car parking will work; if it's near a business area, then commuter parking might be better. If out farther or near a marina, go for the boat/RV long-term parking. This might be best/easiest if your friend simply leases the property out to a parking management company.
SKATEPARK OR CONCERT SPACE: I'd be leery of anything like these, as he'd have to carry a LOT of insurance to cover his ass --- which isn't to say that he wouldn't need insurance no matter what the space is used for; just that the more live people are on-site, the higher the possibility of injury or crime.
CELLPHONE TOWER: this might work, especially if the property is higher than a lot of the surrounding area or in an area that doesn't already have a lot of coverage from other cellphone towers or repeaters. But the downside is, a lot of community pushback if they object to having the tower in their neighborhood.
ROADSIDE OR CONTAINER MARKET: depends on the amount of traffic in the area --- no traffic means no potential customers driving by. But how big is the property? You'd need to have a hefty chunk of the space set aside for a parking area, plus what kind of road access is in place?
So all in all, the main things to consider (with ANY use) are access, business permits, and insurance/legal liability. Whatever he ends up doing, he doesn't need something with a really high rate of return: he needs enough to cover that $700-monthly mortgage, insurance and other business costs, plus enough over to budget for extras like fence repair or security.
posted by easily confused at 5:02 PM on September 3, 2012
SKATEPARK OR CONCERT SPACE: I'd be leery of anything like these, as he'd have to carry a LOT of insurance to cover his ass --- which isn't to say that he wouldn't need insurance no matter what the space is used for; just that the more live people are on-site, the higher the possibility of injury or crime.
CELLPHONE TOWER: this might work, especially if the property is higher than a lot of the surrounding area or in an area that doesn't already have a lot of coverage from other cellphone towers or repeaters. But the downside is, a lot of community pushback if they object to having the tower in their neighborhood.
ROADSIDE OR CONTAINER MARKET: depends on the amount of traffic in the area --- no traffic means no potential customers driving by. But how big is the property? You'd need to have a hefty chunk of the space set aside for a parking area, plus what kind of road access is in place?
So all in all, the main things to consider (with ANY use) are access, business permits, and insurance/legal liability. Whatever he ends up doing, he doesn't need something with a really high rate of return: he needs enough to cover that $700-monthly mortgage, insurance and other business costs, plus enough over to budget for extras like fence repair or security.
posted by easily confused at 5:02 PM on September 3, 2012
My spouse says, "Cook meth".
All kidding aside, pretty much anything is going to require an additional investment that will put your friend further in the hole financially. No inspection before he bought the place, trusting the guy to do the right thing after he'd already handed over the money, insufficient insurance...I'm sure you're aware your friend made some really bad financial decisions here. Plus, running small businesses is *tough* work. He may be better off selling the land for a loss than trying to make this work.
Flea markets are okay, but the profit is offset by the upkeep and management of the facility, which will be seeing a lot of foot traffic. You'll have a lot of trash to dispose of, you might need to have additional restrooms, etc. Is your friend able to be on site and take care of all that or hire someone he trusts to do it for him?
Storage facilities are good business pretty much anywhere. Lots of people want to declutter. Also, they function with a skeleton crew provided you have a good security system.
posted by misha at 5:03 PM on September 3, 2012 [1 favorite]
All kidding aside, pretty much anything is going to require an additional investment that will put your friend further in the hole financially. No inspection before he bought the place, trusting the guy to do the right thing after he'd already handed over the money, insufficient insurance...I'm sure you're aware your friend made some really bad financial decisions here. Plus, running small businesses is *tough* work. He may be better off selling the land for a loss than trying to make this work.
Flea markets are okay, but the profit is offset by the upkeep and management of the facility, which will be seeing a lot of foot traffic. You'll have a lot of trash to dispose of, you might need to have additional restrooms, etc. Is your friend able to be on site and take care of all that or hire someone he trusts to do it for him?
Storage facilities are good business pretty much anywhere. Lots of people want to declutter. Also, they function with a skeleton crew provided you have a good security system.
posted by misha at 5:03 PM on September 3, 2012 [1 favorite]
I'll echo pla (on preview, easily confused and misha) and say that you (or your buddy) needs to do some research to figure out what are some possible income generating uses are for this property. It is remarkable (to me, at least) that your buddy's insurance didn't cover the damages but I am unfamiliar with the details of commercial mortgages (which is what I assume your buddy has).
If you don't want to take a second loan out, you need to start thinking about some viable business ideas that can use the property to generate income and attract investment to improve the property or some other exit strategies which other folks have mentioned up thread. There is no easy way out on this...
posted by scalespace at 5:08 PM on September 3, 2012
If you don't want to take a second loan out, you need to start thinking about some viable business ideas that can use the property to generate income and attract investment to improve the property or some other exit strategies which other folks have mentioned up thread. There is no easy way out on this...
posted by scalespace at 5:08 PM on September 3, 2012
Parking lot.
Fee-based community garden, if there's land that's not paved over.
Event space - in concert with a tent-rental place.
Paint ball course.
posted by Kololo at 7:42 PM on September 3, 2012
Fee-based community garden, if there's land that's not paved over.
Event space - in concert with a tent-rental place.
Paint ball course.
posted by Kololo at 7:42 PM on September 3, 2012
RV storage doesn't even have to be indoors. My parents use one in AZ that is open to the air with a tall fence around it. Seems like easy money to me.
posted by Foam Pants at 8:01 PM on September 3, 2012
posted by Foam Pants at 8:01 PM on September 3, 2012
I know that city living race car drivers are always on the lookout for somewhere to park their race car/trailer. They would love to have that combined with some warehouse/lockup facility.
posted by GeeEmm at 10:00 PM on September 3, 2012
posted by GeeEmm at 10:00 PM on September 3, 2012
Put it up for sale and pray that he can clear enough to get out from under.
Let this be a lesson, don't take out an under-capitalized mortgage.
Also, don't jeopardized your Mom's house.
Also, Mom, don't jeopardize your house.
posted by Ruthless Bunny at 8:52 AM on September 4, 2012
Let this be a lesson, don't take out an under-capitalized mortgage.
Also, don't jeopardized your Mom's house.
Also, Mom, don't jeopardize your house.
posted by Ruthless Bunny at 8:52 AM on September 4, 2012
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posted by slater at 10:54 AM on September 3, 2012 [1 favorite]