Am I on crack or is it the person trying to sell this?

9 Replies

Ok to you Austin investors:
http://www.loopnet.com/Listing/15696593/701-Tillery-St-Austin-TX/?intcpt=false&sourcecode=1lne0t006TT20150326LN&linkcode=&utm_source=loopnet&utm_medium=emailmarketing&utm_campaign=LoopNews
$20 million for this? Seriously?
What am I missing?

Originally posted by @Greg H. :

@Richard Smith

The value is in the 12 acres

Not sure why, taking the surrounding blocks as a guideline, you'll have 70 plots @ 300k each giving you about $19m. And that's with constructed houses.

Ok I can sort of maybe see that. Still way over priced in my opinion but I missed the acreage altogether before

$38 per square foot.   The question is, what can get built there? One group is getting close to getting approvals on 200+ units on 1 acre in the same zip. That kind of density can justify a very high land price.   The Johnson Govalle neighborhood association can be difficult with blocking zoning changes, but if you have 20 million to pay for dirt, you probably have a few bucks to influence the neighbors and the city council. 

@Jon Klaus seems like a suckers play to even consider paying 20 million for dirt unless you already have those approvals in hand.

This guys has a number of strange deals like this. I toured one once. It was an old folks home turned halfway house. It was also overpriced. I think he hits these prices by using seller financing. However, I think it often ends in foreclosure. 

http://www.buttross.com/

As for this specific one. It is overpriced but 1M an acre would not be bad for high intensity. It is currently zoned CS-MU which allows high density mixed use. So, you would not have to do any zoning work. 

Youre on crack. You're beaming up to scotty

Originally posted by @Jon Klaus :

$38 per square foot.   The question is, what can get built there? One group is getting close to getting approvals on 200+ units on 1 acre in the same zip. That kind of density can justify a very high land price. 

Yeah, but as a buyer, that would be my profit, not the seller. If I've got to take the risk of getting planning approval for what is probably a change of zoning (as a guess), then I'm reaping the rewards, not the seller, who has zero skin in the game.

I'm not trying to justify the price, but I am saying downtown Austin and nearby have areas that absolutely justify $38 per square foot, where the developer can make a substantial profit.  Maybe Tillery St. Is not there today, but could be very soon.  Certainly 6th, 7th, (just east of I-35) and other streets in the zip are there and beyond.  

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