Potential new construction

[Michael Galvis]

For anyone that has done new construction deals in Philly I have a question. I have a potential property that I’m trying to put under contract but it’s a strange one. First of all it’s two properties that has been converted to one that also has two separate deeds. I was thinking since there’s a lot of new construction in the area, to try to market it as potential tear down and rebuild as a new construction for the new properties. But the problem is they’re rowhomes and one of the sides is connected to a neighboring house. My question is does anyone think that it’s wise to try to market it that way or if it would be smart for an investor to take on? Would appreciate anyone’s input on this!

[Mayer M.]

@Michael Galvis

I feel like that’s a stretch at $250k. Looks like there are quite a few home over there that have been on the market for a while. Also, being each lot is 12 feet wide takes away from the value tremendously.

Figure it costs $100 per square foot to build new, $7,500 to demo each structure. If I’m paying $125k per structure, then demo for $7,500 then build 2000sf new construction for $200k = $332,500 + carrying, closing and financing costs. This is a losing proposition in my opinion. If resale value was $450k+ maybe, but there are larger wider homes on the block available for less than $450k, maybe yours are with $350-375k when done.