Me and my fiance have a opportunity to purchase the property next door to use for a measly $2,000 here in Sandusky MI. He's the deal the house is falling apart due to a bad roof needs to be torn down, it is twice as big as our place land wise. We are planning on moving and selling our house which is older and in need of alot of updating. I feel like it is a great deal and could possibly add to selling our house we are just nervous of being stuck with it and it being a money pit rather then a profitable deal. The property according to the owner was last assessment was valued at $16,000 I looked at the state value and it is currently $12,000 based off just that alone. We were thinking our best option would be to sell on land contract both ad a deal or the house on contract and sell the land next door straight up to someone but to who? Who needs to take the house down. And input would be greatly appreciated Thanks.
@Nicholas Vermeulen One thing I’d encourage you to do is to “play developer” in your mind. I’ll just make up some numbers...
If sold properties go for $100K and the cost to build is $100/sq ft and it’s a 1,000 sq ft home you know where you stand. Then you had to add in the cost of the land, cost to scrape the tear down, holding costs, etc.
There are plenty of parcels of land that make sense to develop and a ton that make no sense (economically) to build on. You’ll know the details of this particular parcel way better than me!
I can't see it worth the time to mess with-especially if you have to pay to get it knocked down. There is a reason it is only $2,000 and they have not done anything with it. Sounds like a liability to me.
Thanks guys for you input! I failed to mention it is family that is selling it and for $2000 to us only. They maintain the yard and no longer wish to do so because of job hours and planning to move.
@Nicholas Vermeulen To be honest, your purchase price, the assessor's value, and their reason for selling are all immaterial to someone who is buying it. The person who is buying it will have to scrape, pull permits, rebuild at a certain cost-per-sq-ft, and hopefully have some profit after paying a realtor to sell it and incurring closing costs. As a macro example, look at Detroit. Homes for $1, taking bulldozers to blocks of homes, etc. Why didn't they just sell the entire block to a developer for $200,000? Or $20,000? Or $2,000? It just didn't make economic sense for a developer to build.
Now if I were in your shoes I'd probably buy the lot for $2,000 and pay to have the home scraped. Now my home is effectively on a double lot and I just have a barrier between me and the neighbor on one side. I'd pay money all day long if I could do that. Unfortunately, I'm living here in San Diego and it would cost me about $1.5M to do that...so...kinda...different...economics...
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