The old adage “location, location, location” does not necessarily apply to functionally obsolete buildings. With obsolete property, an action plan might actually be more important than the location. After all, if the location were really good, the building likely wouldn’t be obsolete in the first place.
When you’re talking to a bank you need to sell them on your plan of action. You have to begin by answering these three questions for them:
- What happened to the company that used to be there?
- What industry did that building serve and what’s the state of that industry today?
- What’s the current neighborhood around the building/property like?
If the building is so old and neglected that nobody wanted to take the hard work of fixing the building to do something with, then there may be opportunity. What that “something” is, is the big question. The fact of the matter is that things have changed in that area since the property was first abandoned.
For instance, if your property is in a floodplain, that’s an obvious reason why the building might be vacant now. But is it possible to rebuild in the floodplain or is it time to turn it into a marina? That’s THE way you need to view those kinds of properties.Water can be your friend. If your property is on the shore of anything, there may be a market for a boutique hotel, waterfront dining or a series of interesting shops for a destination retail location.The answers to these questions are necessary to have a meaningful conversation with your bank.
Lenders will be listening for the solutions to these problems. That’s why an action plan is necessary. A solid action plan with solid answers significantly increases the likelihood that your bank is going to say yes to your project.
If you nneed some additional action plans, we can help you brainstorm. Perhaps that problem location is just an “undiscovered nugget” awaiting some new mining/thinking to polish it up!