I want to talk to some developers who built apartment complexes around a certain area. My idea is to see how they feel about buying my land along with the properties next to me(2 different owners)for real estate development. I am concerned because this is a $50+million type of deal and I am a nobody in the real estate world.
Should I just call their office and ask to speak to a developer? Or should I speak to the 2other landlords on the block.
Hi,
The very first thing is it appears there are actually 4 buildings on that block? Am I correct?
It looks like what you see as value is the existing buildings value based on cap rates / gross rent multipliers as apartments? Is this correct? I don’t think you have actually thought about what the land it’s self is worth? And worse yet in your case these good sized buildings have to be demolished and removed which cost’s money and time!
Worse yet is these buildings were built before 1978 so they presumable contain lead based paint and asbestos which makes this a huge expense to remove the buildings under a permit and environmental compliance!
Between the 5 freeway and 31st avenue there are 4 or so fairly good sized empty lots, if I was inclined to develop property in that neighborhood I would try to buy something vacant before trying to tackle older existing structure’s!
I actually kind of know that neighborhood as it is the Seattle China Town (Asian) district I think, I used to buy equipment from a company called Bidadoo (Maybe we still do?) to take into Canada and Alaska on 1st street right by the stadiums! (Other side of the freeway.)
You see with the buildings as apartments the value is pretty good because of income against expense, but developing means vacant property and either you guys pay for demolition which ruins income until a buyer is found, or the buyer pays for demolition but pay’s way less than the land is worth to clear it!
The next issue that will come up is what is current zoning? (Unit’s per acre?) as when these buildings were built there were no requirements to have two parking spaces per unit, handicapped parking and fire / life / safety access!
How big is the actual block, your four buildings are sitting between 16th and 18th street, but how wide? How Deep? And is there an alley behind your property as I could not tell? Do you have any idea how many stories there allowing for new development?
What ever property value is, land value cleared is probable 1/5 or 1/6 of that and then with demo required, it either comes out of the sellers pockets for a sale or it comes out of value which makes it considerable lean!
GR
Thanks GR. Yeah it is either 4 or 5 buildings can’t remember and they are large buildings. I didn’t really factor in the cost of demo which would be 500k+. I will just look for tenants but I fear it will end up being vacant.
If you are buying from bidadoo than you must be a large scale general contractor correct?
i guess the best way is to spot active builders near your land and check out their reputation from his past clients.