OfflineDetails:
2 Properties sold in a package deal. 1.74 acres combined. 1 house is about 1,400 sq ft including the basement, which is not livable. The other house is abour 2,400 sq ft including the basement. Also not livable.
I got a bid for bringing them to a rentable state was $25,000 minimum
To resell, $50,000 minimum
To remodel, $75,000 minimum
That's just the bigger house. The smaller is less extensive as far as making it rentable, but they both have structural problems and cannot be financed.
Comps based on square footages were $247K fot the big one and $155k for the small one.
Cost to demo and rebuild both houses (replacing with four 2,000 sq ft houses which comp at about $247K each)is about $505,000.
The asking price was $185K for the big house and $137K for the small one.
I offered $187K for both.
So here's the math.
187K+30K(demo)+10K(rezone/subdivide/sewer)+25K(lanscaping)+$440K rebuild 4 houses=$692,000
The total value based on comps=$988K-$692K(expenses)-20K(assign Fee)=$276,000 profit for developer.
Bare lots in the area are going for about $200K
Now you are allowed 12 lots per acre, but I wanted to be conservative considering the market. I don't know if a developer would want to risk that much developmment right now.
I don't know exactly what a developer wants for ROI.
Is this as good of a deal as I think it is?
Will a developer snatch this up?
I made the offer a week ago and I just got an e-mail from the agent stating she would like to speak to me at my earliest convenience.
I don't know what my maximum offer should be on a deal like this if she is to counter.
Any help would be greatly appreciated.
Thanks, Ben
I went and saw the houses and they are on farmland with some other older houses, but the major development is less than half a mile up the hill. And I intend on making some calls tomorrow to find out when some of those buildings were built.
I was under the impression from the seller that it was all in the last couple years, but I want to know if it was during the boom or after the bust.
I think this is a niche market, so with some further research I may find I want to do some more deals in the area.
It's about 2 1/2 hours from my house.
Thanks, Ben
The seller has countered with $195K!
I told the agent I would need a day or so to run the numbers and also let her know that I would be assigning the PA to an investor/partner. The assignment didn't seem to bother her.
I am going to call a real estate agent in the area tomorrow and get comps on vacant lots. I looked some up but I want good numbers. If the vacant lots are selling at the prices that I found (about 200K) I think this is a no-brainer!
Thanks, Ben
Ben, everything sounds great.. I hope it works out for you. keep us posted!
Thanks, Steve
Hello!
I am not a developer. My concerns with the lots are streets and sewers. One of the streets along my house (about 8 blocks worth) could use replacing. To replace the asphalt street and re-do the sewer it was going to cost the city $2.3M. To give your lots street and sewer access (unless you go with well water and septic tank), this was only going to cost $10k?
I guess it would just depend on the potential layout of these 12 lots in relation to the street. I suppose this concern could be addressed in your $440k for 4 houses number.
The more thorough the question, the more thorough the answer.
Please fill out your profile with as much info as you're comfortable with.
Thanks.
Well, the sewer is 300ft away right now and the city planner didn't think it would be too difficult to pipe it to the houses. The water is a community well.
As far as the streets, there are several other houses on the same street. It is a 400 or 500 ft dirt road, but unless the developer bought the whole street I don't think paving the street would be an immediate issue.
I do think that would be a thought for the future, but if you owned the whole street you are talking probably 15 or 20 acres at 12 lots per acre. Then paving would be a minor cost.
Thanks, Ben
Like I said I am not a developer, but there is a mall and a bunch of new stores about 1/4 mile from the house. about 1/2 mile from the street it's on, so the developer may want to build a few houses or move some manufactured homes in just until he can build commercial on it or sell it for more money.
I can't possibly guess what kind of strategy will be used. I just think the price is good enough that there are many options.
Thanks, Ben