I'm looking for some thoughts on a potential deal I recently came across.
This would be an off-market purchase of a double lot (99' x 140'), and it's Zoned R2. As we begin to put together build costs, I will let the numbers dictate the end goal, but I'm curious which option you would lean towards...
It is in a good area of town that has a nice mix of rentals to owner occupied SFR. There is a mix of duplexes in the area, but not many new ones. It is definitely a forgotten little gem of a lot.
1. Build a Duplex and keep as a rental.
2. Build a Duplex, fill with tenants and sell as a turn-key property to an investor.
3. Build two townhomes and sell individually.
Again, we just came across the deal this week and will be collecting some numbers next week to begin doing a more detailed analysis, I'm just curious where you would lean....
Have a great Labor Day Weekend! And thanks for the input in advance.
@Zach Harsin , do you already have a lender willing to give you a construction loan?
@Allan Rosso , yes. We have a good working relationship with a local bank in town...
What about building the duplex, fill it with tenants, then hold for a year before selling it turnkey to an investor? Avoid short term capital gains?
@Allan Rosso that was what #2 was. Sorry for not being specific on holding holding period....
@Zach Harsin You stated its a double lot, which to me means that the lot could be split into two different properties. If that is the case, that would be my first coarse of action. Once split, confirm that the zoning is remains R2 (some cities have minimum lot sizes). Assuming you now have two R2 lots, build two duplexes, each on its separate lot. A 50x140' lot would be easy to put a duplex house on (in my area, we do it on 30'x120' lots).
As for what to do with it, I am a build an hold investor, so I say keep it.
If you set on selling it, you market will dictate what you should do. If you have a strong owner occupant pool for the area, it might be best to sell it vacant. If you tenant are just placed into a new house with long term leases (12months) then an owner occupant will not be interested as they will need to move in at or soon after closing.
@Zach Harsin Understand. My local codes allow for only a 3ft (or 10% of the lot width) side yard width, so a 30ft wide lot allows for a 24ft wide house. Obviously, requiring 10ft wide side yards would not work.