OfflineI have a piece of property that I think is a potential gold mine.
It is 1.74 acres. Two seperate lots with two run down houses on it. I mean RUN DOWN. The contractor that gave me a bid said that they should be torn down without a doubt.
Now these properties are in a DEFINITE area of growth. Apparently, Fred Meyer bought the neighboring piece of property recently, and there is a subdivision very close.
A contractor is going to give me a bid for demo, and I intend on getting a price on a low end adair home or something like it. Adairs sell in my area for $40k to start.
With a 3/2 the larger house comps at $247k.
With two new, 3/2 houses these properties would comp at nearly $500k.
The seller owes $127k, so I figure after deducting closing costs and the cost of 2 new homes. That leaves $345k.
I'll have a bid soon, but I think that leaves enough room for demo, over $100k profit for the investor and $20k plus for my assignment fee.
What I need to know is, does anyone have experience in wholesaling bare land. I know this is a good deal, but are there just too many if's?
I just wanted to get the opinions of some experienced pros. Thanks for all the input
Thanks, Ben
One more time
Thanks, Ben
depends on your play on the property/s.
If you are looking at land and land alone will be valued based on comparitable land sales NOT what retail houses are selling for. Meaning Without structure or vertical developement (income producting) it's based strictly on comparitable land sales.
You indicated growth area that I understood to be residential development, then looking at demo cost and will the $127k be a wholesalable price for a developer to pick up based on comparitable land sales. You'll have to do a bit of due diligence to see what you are able to do (zonings and/or re-zonings, restrictions, permits, subdividing, etc.) to recognize upside and/or being able to bring to it's highest and best use.
Then goes into play, if you could take both properties at $127k what WOULD it cost to rehab? If you're talking $500 ARV on one, could a buyer bring in $100k (or whatever) in capital to bring the property to $500k ARV. Which even though it's seems like a large pickup (repair cost) for a rehabber with that much on the front end, BUT he's going to be looking at the whole picture. Looking at his gain on the backend. It's all about the numbers, ROI/COCR the dollar range getting in doesn't matter if it's strong enough on the backside.
You also mention some starting in $40k range? If it's currently pulling a comp at $274k doesn't seem to fit a $40k new build?? Sorry may have just misunderstood the direction on that.
Then poses the question do you have a buyer for it? Whether it's rehabbed or pushed to a developer/builder. It may be a great deal, but it's only great if you can close it.
Hope it was of assistance.
Blessings,
Jen
I am in the process of doing a deal like this as we speak. I have gotten the property under contract first of all. Then I have contacted the developers that are capable of such an undertaking. Ones that work in the area of the subject property. Your normal fix/flip buyers won't do it. The permits, architectural planning, zoning, that needs to be approved and cleared by the city can take up to 90 days before you can break ground! Maybe your city is quicker! But finding and going to the right kind of buyer, this will work. I did not do the demo myself. The buyer will do that, no need for me to do it. I would have to close on it, do the demo and then sell it.
So if the land can be sub divided into two legal plots(if it's not already) and two houses built and it is a fast moving area with low average DOM a builder/developer will take it at the right price.
Just my thoughts.
Michael Mangham
MD Home Acquisitions LLC
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site
Thanks for the input.
There are two lots totaling 1.74 acres together. Adair has homes that can be built starting at $40k. You pick a floor plan and they will build on your land for that price. The existing houses have SEVERE foundation erosion, flood damage, dry rot in the structural trusses, and more. The contractor basically said you could build a new house for less than it would cost to get these to a livable state.
So I figure all the cost of demo, rebuild, rezone, closing costs, and my fee. If there is more profit to do it this way I will, and if not I will wholesale it as a buy-and-hold bare land.
I'm just thinking developer/investors are probaly more common than someone who wants to spend $130k for bare land and hope for the best.
I will start putting out ghost ads and calling developers in the area to see if they might be interested in buying in this price range with this kind of profit. Get cost estimates for demo,new build, drain fields, and rezoning. Get it under contract get a buyer.
If I'm missing something important feel free to correct me.
Thanks, Ben