My wife's aunt has a property that is two lots wide. She is wanting us to buy it as she needs the money for health care ( and keep the property in the family). The area has exploded with duplexes in the last few years (new construction). I don't think it would be hard to get it zoned as there are 40 new units across the street. My concern is: can I make decent cash flow from building and renting a new duplex? There is a large university less than 3 miles away. The duplexes in the area are 1100 sqf with 3bed/2 bath and 2 cars garage. I haven't talked to a builder yet so I don't have the numbers to run. Would like some feedback from anyone who has built and rented new duplexes. Thanks,
40 units across the street? Why can't you build 40 units too, why just a duplex?
1. The land is only big enough for 1 duplex and restricted to two levels.
2. The property is 90 miles away and i'm already managing 5 properties in two states.
3. I eat my meals 1 bite at a time. Why would I order 40 of anything if I hadn't tasted and liked the first one?
Where in tulsa are you building the duplex? Have you started yet? Construction costs?
Did you decide to buy and build Guy?
The property is in Edmond Ok. We are at a stalemate. The aunt is willing to sign the property over to us ( she doesn't want to pay the taxes of $600 a year). However, there are two structures on the land. One is a 900 sqft house and the other is an oversized two car detached garage. Both structures are filled with her "valuable antiques and collectables".
She doesn't want anything done to clear the land until she can move, sale or gift away her treasures. We have offered to assist in this process but the reality is, the thought of losing her possessions just overwhelms her.
There is nothing of any real value in the structures and the roofs leak and are causing damage inside. The true issue is this is the place she has spent her whole life. She never married and lived with her parents until they died and she still lives on the property in an adjoining house. We get that and are willing to be patient.
The recent issue is we don't want to take ownership until we can clear the land and move forward. The issue is not paying the taxes ( we will end up paying them for her) but the liability of the property. The structures are vacant and dangerous if anyone went inside (kids or vagrants) At some point the city will condemn the property and we don't want to in possession at that time.
We are her health care proxies and will handle the estate when the time comes. Until then, we are continuing to build our portfolio. We have bought some property in the Springfield, Mo area and have started buying first position notes.
Thanks for the follow to my post. I will update when the situation changes. The area continues to change with more MF properties being built.
Thank you. I have had similar family issues. Good luck!
The first hurdle would be getting the zoning...Can you do multi with out a variance? For some reason a zoning board is much more receptive to "Hey can I get a variance to build 40 duplexes which will give you around 8-10 million in tax base" vs "Can I tear this house down reducing your tax base then build a duplex in it's place resulting in an additional 100k in tax base"
The next and probably biggest issue is cost.. Unless your doing a lot of it your self and your time isn't worth much, it is really difficult to build one duplex that would make sense..Cash flow wise. (A 3-2 with 2 car would be around 850-900 per month by us)
We have tried to build a few times and can't get it to make sense.. I was around 60 dollars a ft on my budgets Gcing myself and doing some work.(I could buy for 30-50 fully occupied with opportunity to force appreciation). The reason the 40 duplex builder is building is there is massive material and labor discounts with volume. Imo this is why you almost never see a single multi-family structure go up.
Peter, thanks for the comments. The aunt would like to keep the property in the family and my wife would too. Her grandfather acquired quite a few properties in the Edmond OK area in the 30's and 40's. He had 6 children and gave each one of them a property when they turned 18. The aunt got the property where her parents lived. It is the only property left from what he acquired. The 5 boys all lost their property over time.
We will have the property eventually, but what do we do with it? We will end up with 3 lots (two one street and the third behind them on another street. The houses are small (900sqft and 600 sqft) and would cost more to rehab than their worth.
There are new duplexes going up in the area and renting for 900-1000. We could sell the property to one of the builders buying up old properties and putting in duplexes, but the wife wants to keep the property in the family. Thinking that we get the property free and clear, the cost of building would be lower as there is no land cost.
I don't think zoning would be an issue as they have duplexes across the street and on the next block. There would be cost to clear the land and upgrade the utilities.
I would welcome any suggestions on the best use of the land. I don't think anyone would want it for SF with all the MF in the area. We have no intention of moving to the area so I'm at a loss for what to put there.
Thanks, everyone for your input.
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