Need help w/ new proposed development on current rental property

[John Kwon]

Hi,

We recently acquired a duplex. Shortly after, I was contacted my the economic development committee and the mayor of the town about a proposal to develop the area. Most home in the area are very old (90+ years old) except mine (30 yrs). They are proposing to new construction with commercial space on the first floor and possible 4-6 residential units above along with parking. 

My current property has about 2000 sq ft. New proposed building would potentially give me 1800 sq ft of commercial and 4000-6000 sq ft of residential space.

I purchased the property for $215K. Projected CoC is about 18% based on local rental after capex, debt service, vacancy, repair, etc.

There are 4 other owns who are also involved in this project, but their initial investment was much lower and the homes in pretty bad shape.

I have no experience in building a new development. I am buy & hold investor. Also, I am would have to invest (and find capital) to build a new building and have loss of income during the construction. Also, there is huge risk of not getting the property completed and have a total loss.

But the upside of increasing rental units with potentially higher NOI is appealing.

Any investors out there who had a similar experience or any advise is appreciate it. Thanks.