Help me analyze this deal

4 Replies

So the biggest challenge I see with this property is the lot size. It is big enough to split and that would be my plan. But how do I calculate that into the deal? Knowing I can sell the other lot off or even better build a rental on it, changes all the numbers. But how? I did check with the city if I can divide it. 

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@Nicole Harrington break it into small steps.

1. What is property worth after the lot is subdivded and on a smaller lot. (X)

2a. What is the small vacant lot worth unimproved (Y)

2b. What is the cost to build, and what is the value of the small lot with a completed build worth (Z)

Value= X+Y

Value =X+Z

If X covers your cost after the rehab and you pick up Y for nothing and can build and sell for a gain that is a win. 

Hope that helps.

@Nicole Harrington Try reaching out to contractors or agents in the area and work the way down or up and see if they might be able to help. These cost are going to very dependent on the area.

If I was a betting man I'd say the zoning and permit cost will be more time and energy than financial, but should be taken into factor as holding cost will rise the longer the process takes.