Buying & Selling Real Estate Discussion

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Tiffany DeTiege
  • Investor
  • Portsmouth, VA
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How to price a a dilapidated house?

Tiffany DeTiege
  • Investor
  • Portsmouth, VA
Posted Jul 12 2022, 21:22

I have an opportunity to buy a dilapidated house in Austin from a family friend it is near I-35N and Rundberg. I hope to tare it down and but a duplex or quad plex. I want I deal. Are Austin's tax assessments accurate at all? The lot is around 9000sqft. How can I determine the value?

Austin, Texas

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JD Martin
  • Rock Star Extraordinaire
  • Northeast, TN
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JD Martin
  • Rock Star Extraordinaire
  • Northeast, TN
ModeratorReplied Jul 12 2022, 21:52

If you're tearing it down, the base value is pretty easy - value of the lot and remaining improvements (water tap, sewer tap, electric tap, etc) minus the cost of tearing down and hauling off the structure. Whether or not you can buy it for that price, or cheaper, is another story altogether. A lot of dilapidated houses stay that way because they cost more to get rid of than the land is worth. 

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Jordan Moorhead
  • Real Estate Agent
  • Austin, TX
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Jordan Moorhead
  • Real Estate Agent
  • Austin, TX
Replied Jul 13 2022, 07:22

@Tiffany DeTiege I agree with @JD Martin. I would try to pay for the value of the land and maybe slightly more depending on the zoning. That being said make sure you can build what you want on it and it makes sense, building is extremely expensive right now.

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Scott E.
  • Developer
  • Scottsdale, AZ
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Scott E.
  • Developer
  • Scottsdale, AZ
Replied Jul 13 2022, 07:27

Don't look at the tax assessment, that figure is meaningless for this situation. 

You say you want to build a duplex or a fourplex. To determine the value of your deal, you need to look into what other new construction duplexes and fourplexes are selling for in the immediate area.

Take that number, then subtract out the cost of construction and holding costs. This will give you a rough idea of what the lot value should be.

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Scott Mac
  • Austin, TX
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Scott Mac
  • Austin, TX
Replied Jul 13 2022, 07:42

Will zoning let you build a 2 plex or 4 plex there or is it just SFH zoned?

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Chris Seveney
  • Investor
  • Northern Virginia
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Chris Seveney
  • Investor
  • Northern Virginia
Replied Jul 13 2022, 07:54
Quote from @Tiffany DeTiege:

I have an opportunity to buy a dilapidated house in Austin from a family friend it is near I-35N and Rundberg. I hope to tare it down and but a duplex or quad plex. I want I deal. Are Austin's tax assessments accurate at all? The lot is around 9000sqft. How can I determine the value?


 To determine value I would find the value of a similar lot minus the cost of demolition. I would not include the added benefit of utility connections as if you build a quadplex the utility connections are most likely too small and would need to be redone anyways.

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Aaron Gordy
  • Real Estate Broker
  • Austin, TX
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Aaron Gordy
  • Real Estate Broker
  • Austin, TX
Replied Jul 16 2022, 11:15

@Tiffany DeTiege If its a tear down then it should be valued as a lot minus the cost of tearing it down and hauling off debris. Austin tax assessments are notoriously off the actual market value. You should check with the city zoning on what can be built there to be sure. If there are easements or flood issues which are in some parts of that area then that might change what you can build. Btw, I have a rental in that area and I have done very very well with it. 

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Eliott Elias#4 Starting Out Contributor
  • Realtor
  • Austin, TX
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Eliott Elias#4 Starting Out Contributor
  • Realtor
  • Austin, TX
Replied Jul 16 2022, 12:55

Look at the zoning. Make sure you know what you can and can't do. It costs money to tear down, I'd see if it's worth wholesaling. DM me I could help find you a buyer 

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Tiffany DeTiege
  • Investor
  • Portsmouth, VA
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Tiffany DeTiege
  • Investor
  • Portsmouth, VA
Replied Oct 1 2022, 15:12

Thank you all sooo much for responding. Your comments were very insightful. 

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Replied Oct 1 2022, 17:03

This is good to know because I am a new investor, looking to start.