I am a fairly new wholesaler and I need some help analyzing a deal!
This house was severely damaged by Katrina and abandoned ever since. It is located in St. Bernard Parish in a historic district. Currently, it is a 4-plex with (1) 3 bed/1 bath and (3) 1 bed/1 bath + laundry room and grass for parking. Due to the extreme damage, I'm sure the buyer would tear it down and build a new structure. I was advised by a builder that re-building would be somewhere near $100/sq ft because this neighborhood is not exactly high end. So with current square footage of about 2,900, that leaves me with $290,000 in repairs. Looking at the comps, the average sale price is $170/sq ft. My issue here is that a house that large would come out to be much more expensive than any recent solds, even though its the same price per square foot. I'm not sure how much of a problem this would be. It would also all depend on what the investor would rebuild it to be.
The seller ultimately wants $70k for it. If this house were to be built and flipped, keeping the same amount of square footage, it could be a deal at 80% ARV. However, I'm struggling with how to comp it for a multi-family property because an investor could go so many different ways with it. For instance, they could rebuild it exactly as it was, but they may also be interested in building it as a double or a triplex, etc.
I tried offering the seller the land value of $25k, but she was offended by that and said no less than $70k.
What are your thoughts? Deal or no deal?
Hi @Alexis Edwards . I am both an investor and a licensed realtor in New Orleans. If the property is a tear down, which it sounds like it is, then it worth land value only, minus the costs of tearing it down. The cost to tear it down would run around 10k for a property that size. It doesn't sound like you have a deal here if the seller wants 70k minimum and you say the land value is 25k.
Well I took that land value from the assessor’s website. However, I did look up vacant land comps in the area, and based on price per square foot, it would come to about $63,000. After cost of demo, it’d be an offer of $53k. Which value would you go with?
The seller seems emotionally attached to the property because of the damage, and she felt that the government cheated her once all was said and done. They didn’t give her enough to fix it. She also claims she has a 70k offer that she’s been sitting on for 2 weeks, but I think that’s just her way of getting me to come up in my offer.
Thank you for your help! If I find anything over there I’ll definitely be in touch!