FSBO Tear-Down - Worth while investment?

5 Replies

Me and my partner found a FSBO property in a pretty desirable area of Southern California and after contacting the seller in regards to it, he said the home is a complete tear-down and isn't in any condition to do a quick rehab/fix and flip. Is there still any good value here for a wholesale deal?

It looks like he's selling the property at market price, but the price can't be justifiable if it's a tear down. How should we go about analyzing a fair price to pay for something like this if we were to consider it?

Here are some details:

Asking Price: $680k

Specs: 2 bed, 1 bath, 1,000 sqft.

Comps around the area are around $650k and $690k but fully renovated and 3/2 mix.

What are your thoughts?

Thanks!

If it's a tear down, the value of the property is the value of the lot minus the cost to scrape the house. Given it appears to be listed for what renovated comps are, I wouldn't bother working on this one and move on to greener pastures.

Medium apartment logoAndrew Syrios, Stewardship Investments | http://www.StewardshipProperties.com | Podcast Guest on Show #121

I figured the same, but wanted to get a second opinion. Thanks a lot for your input on this @Andrew Syrios !

In our experience, and all we do is market teardowns and land-valued property, the best way to determine value is to work backwards.

  • What will the lot permit in terms of new construction (per local zoning, set-backs, size (FAR) etc.)
  • What will the lot support in terms of new construction i.e. will the market value of the new construction be inline with the existing real estate values in the neighborhood
  • Divide by around 2.6

That's a back of the envelope way to calculate the value of a redevelopment opportunity......

Thanks,

Brian

Thanks @Brian Hickey very useful info. I'd love to learn more about what you do. I just saw a house that was obviously vacant in an upscale community that was just torn down and currently being redeveloped.