How to price a a dilapidated house?
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?
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.
@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.
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.
Will zoning let you build a 2 plex or 4 plex there or is it just SFH zoned?
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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.
@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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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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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
Thank you all sooo much for responding. Your comments were very insightful.
This is good to know because I am a new investor, looking to start.