A duplex in my small town has popped up in the past few days. The deal includes 5 lots, the existing duplex takes up 1.5 of the those lots possibly leaving the the other .5 of a lot useless though I need to check on that to be sure.
The duplex, which is 1600 ft^2 total (2- 2/1 units) is supposedly grossing $800 a month total though it is currently vacant. They are asking $160k for the whole package which I think is too high.
The remaining 3 lots are buildable according to the agent, though I will verify with the county before moving forward. If I could build 3 more duplexes, perhaps 2 story units with a larger floor plan around 1200 ft^2, then I could get around $800 a month for each unit. The Duplex alone is obviously not a money maker at their price point, but I am unsure how to factor in the additional lots.
How much are the lots worth? Is there a market for them? If you can sell them off you could increase your ROI and keep the existing duplex and get a nice return. If they are worth 20k each you could sell them and have only 100k in the duplex.
I've not seen the layout of the lots yet (the tax map shows the whole thing as a 1acre parcel) but I'm guessing the remaining .5 acre is worth only around $10k as raw land to be built upon maybe maybe $20k if I could squeeze 2 buildable lots out of it.
So the duplex once stabilized will rent for $800 per side?
The existing duplex has, in the past rented for $400 per side, $800 gross (from what I know, this seems low but those are the numbers they are giving me). A new larger duplex on one of the other lots would rent easily for $800 per side, $1600 gross.
The existing duplex is small, each unit is only about 800ft^2 so the rent potential is limited. In my area most 1400ft^2 houses rent for around $1000 a month.
They must be valuing the land at a high price. Plus what will it cost to build a new duplex? I would think no less than 100/sq. ft. Seems like the numbers don't work. I would just monitor the property and see if they lower the price where it makes sense.
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