Home Acquisition for Scrapeoff Redevelopment
I'm in Denver, where there is currently a shocking lack of inventory. I'm more interested in redeveloping homes in the city as opposed to building out in the suburbs.
Some neighborhoods are zoned for duplexes, but are still filled with primarily 2bd 1ba prewar 800 sq.ft. ranches. The numbers work well:
1. Buy the old house for $200k.
2. Invest $650k in a new duplex.
3. Sell each unit for $525k and walk with $200k.
Redevelopers in nearby single family neighborhoods can't build profitably for less than about a $900k price point. This makes the similar sized duplex units look like a steal.
One big problem is that the current owners of the old houses can't find a replacement home.
My idea is to let them trade up into a duplex in their same neighborhood. It would be a win-win. I'm currently building a few units and I'm starting to think I'd be nuts to sell two units without getting a replacement property. Otherwise, I'm out of business pretty soon. Or I'm stuck in bidding wars with the other redevelopers.
Has anyone tried anything like this before?