Hotel to condo conversion
Has anyone run the numbers on converting a hotel into a condo?
There is a 115,000 sq ft, 15 story + basement, dilapidated hotel 1 block away from the town square in my 100k+ person city. It's selling for under $500,000. It comes with a parking garage with 126 spaces and a rooftop pool. The old hotel had 200 rooms, and it's been bought and sold several times and is now county property. The last owner wanted to renovate it into a 125 room hotel.
I am not sure that area is ready for a hotel of that scale. My town has just gotten 3 new 125+ room hotels on the south side of town, close to hospitals, oil and gas companies, and strip mall shopping.
Instead of building out a new hotel, I think the area suits condo living well. There are a couple of bars, restaurants, coffee houses & boutique shops in walking distance. Also a food truck park will be opening up next year, and the town holds several festivals and parades in this area annually.
I think the building could turn into ~70 condos. However, the lower floors of the hotel were meeting space. Where I'm from (Dallas) the mixed use space with restaurants and shops in lower levels has been hugely successful. I was thinking something like a Trader Joe's (small footprint grocery that people will travel to shop at) and maybe another coffee shop or restaurant. This town is like a mini dallas, and I think a mixed use main floor could be really successful.
The closest thing I can think of for a comparable is a luxury high rise community (3 buildings) with about 80 units. These were new construction (poorly constructed and are in a several million dollar lawsuit to recover the poor construction damages) and are part of a country club. Presale 3 bedroom units sold for $300k, 2 bedrooms sold for $250k. Now after the lawsuit, 3 bedrooms sell for $220k, 2 bedrooms sell for $170k. These prices (~$125/sq ft) are elevated for the area-- a an older home that has been remodeled sells pretty strictly for $100/sq foot. At that rate the 3 bedrooms should be $170k, 2 bedrooms should be $140k.
Assuming we sell 70 units that are 1,200 sq ft in the top 14 floors, we could sell for anywhere between $8.4-10.5M on sale, plus rent out the first floor and basement levels. The question I have is how much does a complete gut of a 16 story building cost? Is there any chance for profit?