I just bought 3-unit a property in Colorado and owner-occupy one unit. I plan to add another 1-4 unit property this year. I can do basic remodeling, but not big stuff. None of my properties have needed major overhauls. As I was wandering the neighborhood, I noticed a very ugly house that wasn't kept up. It is abandoned. The floor in most places is missing and it looks like the stairs going up are gone (couldn't quite tell). The lot is huge, but the house on it is not very big. It is listed as Multi-Family with the assessor. The property records show a Public Trustee's Deed in 2008, followed a couple of months later by a Special Warranty Deed for $92,000. Properties in the neighborhood are $300-$400k.
I'm wondering if this a decent candidate to scrape and build a multi-family or nice SFR on. I've never looked into this depth of a project. What are some of the major considerations I should have in mind to determine if it is worth it? Are the lending options for a fresh build similar to buying a pre-built?
If a fresh build is a bad idea, what about renovation and expansion? If I double/triple the size of the property while keeping the old intact is that feasible?
Thanks in advance!
@Bryan O. there are a lot of factors that go into whether or not a new build would make sense. Typically the most limiting factor is the value after completed vs the cost build it out. Then there is the likelihood of being able to buy the property. Typically new construction projects make the most sense as a resell rather than rental, but that also depends on the area. I have some experience with new construction in the Denver Metro and would be happy top have a conversation about it.
@Bryan O. zoning issues are the first issue. But before you spend a lot of time figuring out how to build on a property, see if it's even for sale. Find the own and see what their interest in selling is. It's easy to burn a lot of times on what-ifs when in reality the property is not for sale. Perhaps a builder already owns it and it is just inventory waiting for them to get the time to do the construction.
Thanks for the thoughts. I'd love to have a chat. I'll send you a PM.
Thank you for the advice. I'll start looking at how zoning works. Until I have a really solid grasp on all the ins and outs of building, I'd rather spend the time figuring out if it's worth it to build before I talk to the owners about selling. I wouldn't want to start negotiating with the owners before I know what numbers work for me to make the deal possible. It may be too low to even start the conversation with them and then I'd be wasting both our time.
New builds are new to me, so I like the mental exercise to see what kinds of numbers exist. Pretty exciting overall though. Thanks for the comments and keep them coming!
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing