Rebuilding a Small 4 Plex, Starting with Nothing

[Alexis Edwards]

I have been contacted by a seller who has a 4-plex in St. Bernard Parish, Louisiana. The owner is old and lives far away, so it was difficult to understand her on the phone. However, it sounds like the property has been abandoned for at least 10 years, if not more. It was damaged during Katrina and she did not receive enough funds to repair it. My dilemma now is determining the rehab cost. I assume the damage is at its worst, of course. But I am wondering if an estimate of $100,000 is too low. This is not a high-end neighborhood, so the finishes do not have to be top quality. The square footage is about 2,900 and it is 1 3bed-1bath unit + 3 1bed-bath units.

Do you think I'm estimating WAY too low? Also, what should I estimate if the building needs to be completed bulldozed and rebuilt again?

[Lynnette E.]

If you want a real rough ballpark number, call a local insurance agent.  Tell him the general area and ask him what the replacement cost would be for the units description and sq ft. with a low grade finish.  They have a calculator that will tell them the total cost to rebuild at the current local prices.  Quite often it is way higher than market value to buy a new unit.  That is because it is cheaper to process many building plans and build cookie cutter things than one.