R3 Lot, what to do

[retiredby50]

Hi folks,

Sorry if this is a long drawn out post. I don`t know how much detail to go into, so I`m going overboard a bit.

So I have aquired a town lot. i bought it before joining REIN, on a hunch, so I didn`t do the due diligence(shame, Keith, shame). I am currently racking my brain as to what exactly to do with it. Certainly there are tons of options, but I just simply don`t have the experience to know the best direction.

I am getting the distinct impression that this network is all about buying existing properties, but I`m hoping some of you have done something similar and can tell me what might have worked for you.

The details: 100 X 120 foot double R3 lot at the end of a street in Innisfail, Alberta, one block off main street. Currently a tiny house which rents for $775. PP was $245K. I borrowed 100 from my Heloc and the rest is mortgage. The lot will easily fit a 4 unit-3 bedroom town house, and would also fit 5, but they`d be much smaller. I`m a low income wage earner, but I don`t do consumer debt, so it kind of balances out when I need to get money.

The south end of the lot, which is the end of the city block, slopes upward sharply, and is about 9 feet higher than the rest of the lot. This may not seem significant, but it would mean I could theoretically line the units up on that south end. The main level would now be at street level, but the back of the units would be 9 feet lower, so I could potentially put the garages in the basements.

Some of the variations between my options may seem minute and silly, but I want to make sure I do this right.

My options.

1-Sell the bugger and take my money and go buy as many existing properties as I can. I don`t really make any money on this, but it releases my cash, and now thanks to this place, I have some knowledge on how to buy properties.

2-divide the lot(I don`t know if I can do this yet), build a duplex, sell both sides seperately, take the money and build a second duplex on the second lot, and keep it forever. I`d try to get basement suites in both, if the parking would allow.

3-Do a 4 unit, two story town house building, each 3 bedrooms, about 1300 SF or so. Garages in basements. Condominiumize them, and sell two of the units. I`d try to turn the basements in the units I kept into suites.

4-Do a 5 unit place. Now the units go down to a gross width of 18 feet. I could make them three bedroom units, but the secondary bedrooms are only 8 1/2 feet wide if I do that, so I`m wondering if they should just be two bedroom units instead? In this scenario, I condominiumize it, and sell two or three of the units. Basically I`d sell enough to get the price on the kept units low enough to cash flow. Again, I would suite my units if possible.

5-Design a building, get the permit, knock down the house, and sell it in a state that an investor can sign the papers and start building right away. I`d then take the cash and buy existing properties. I would expect to make some money on this, but I really have no idea how much. Has anyone done this? Any idea what % one could likely to increase the property value, if all other things remain constant?

Well, that`s all I have for now. A big thank you in advance for those of you who have taken the time to read this far. I really appreciate it, even if you don`t answer.

Thanks
Keith

 

[spandza]

QUOTE (retiredby50 @ Apr 1 2008, 12:20 AM) Hi folks,

Sorry if this is a long drawn out post. I don`t know how much detail to go into, so I`m going overboard a bit.

So I have aquired a town lot. i bought it before joining REIN, on a hunch, so I didn`t do the due diligence(shame, Keith, shame). I am currently racking my brain as to what exactly to do with it. Certainly there are tons of options, but I just simply don`t have the experience to know the best direction.

I am getting the distinct impression that this network is all about buying existing properties, but I`m hoping some of you have done something similar and can tell me what might have worked for you.

The details: 100 X 120 foot double R3 lot at the end of a street in Innisfail, Alberta, one block off main street. Currently a tiny house which rents for $775. PP was $245K. I borrowed 100 from my Heloc and the rest is mortgage. The lot will easily fit a 4 unit-3 bedroom town house, and would also fit 5, but they`d be much smaller. I`m a low income wage earner, but I don`t do consumer debt, so it kind of balances out when I need to get money.

The south end of the lot, which is the end of the city block, slopes upward sharply, and is about 9 feet higher than the rest of the lot. This may not seem significant, but it would mean I could theoretically line the units up on that south end. The main level would now be at street level, but the back of the units would be 9 feet lower, so I could potentially put the garages in the basements.

Some of the variations between my options may seem minute and silly, but I want to make sure I do this right.

My options.

1-Sell the bugger and take my money and go buy as many existing properties as I can. I don`t really make any money on this, but it releases my cash, and now thanks to this place, I have some knowledge on how to buy properties.

2-divide the lot(I don`t know if I can do this yet), build a duplex, sell both sides seperately, take the money and build a second duplex on the second lot, and keep it forever. I`d try to get basement suites in both, if the parking would allow.

3-Do a 4 unit, two story town house building, each 3 bedrooms, about 1300 SF or so. Garages in basements. Condominiumize them, and sell two of the units. I`d try to turn the basements in the units I kept into suites.

4-Do a 5 unit place. Now the units go down to a gross width of 18 feet. I could make them three bedroom units, but the secondary bedrooms are only 8 1/2 feet wide if I do that, so I`m wondering if they should just be two bedroom units instead? In this scenario, I condominiumize it, and sell two or three of the units. Basically I`d sell enough to get the price on the kept units low enough to cash flow. Again, I would suite my units if possible.

5-Design a building, get the permit, knock down the house, and sell it in a state that an investor can sign the papers and start building right away. I`d then take the cash and buy existing properties. I would expect to make some money on this, but I really have no idea how much. Has anyone done this? Any idea what % one could likely to increase the property value, if all other things remain constant?

Well, that`s all I have for now. A big thank you in advance for those of you who have taken the time to read this far. I really appreciate it, even if you don`t answer.

Thanks
Keith

 

[spandza]

QUOTE (retiredby50 @ Apr 1 2008, 12:20 AM) Hi folks,

Sorry if this is a long drawn out post. I don`t know how much detail to go into, so I`m going overboard a bit.

So I have aquired a town lot. i bought it before joining REIN, on a hunch, so I didn`t do the due diligence(shame, Keith, shame). I am currently racking my brain as to what exactly to do with it. Certainly there are tons of options, but I just simply don`t have the experience to know the best direction.

I am getting the distinct impression that this network is all about buying existing properties, but I`m hoping some of you have done something similar and can tell me what might have worked for you.

The details: 100 X 120 foot double R3 lot at the end of a street in Innisfail, Alberta, one block off main street. Currently a tiny house which rents for $775. PP was $245K. I borrowed 100 from my Heloc and the rest is mortgage. The lot will easily fit a 4 unit-3 bedroom town house, and would also fit 5, but they`d be much smaller. I`m a low income wage earner, but I don`t do consumer debt, so it kind of balances out when I need to get money.

The south end of the lot, which is the end of the city block, slopes upward sharply, and is about 9 feet higher than the rest of the lot. This may not seem significant, but it would mean I could theoretically line the units up on that south end. The main level would now be at street level, but the back of the units would be 9 feet lower, so I could potentially put the garages in the basements.

Some of the variations between my options may seem minute and silly, but I want to make sure I do this right.

My options.

1-Sell the bugger and take my money and go buy as many existing properties as I can. I don`t really make any money on this, but it releases my cash, and now thanks to this place, I have some knowledge on how to buy properties.

2-divide the lot(I don`t know if I can do this yet), build a duplex, sell both sides seperately, take the money and build a second duplex on the second lot, and keep it forever. I`d try to get basement suites in both, if the parking would allow.

3-Do a 4 unit, two story town house building, each 3 bedrooms, about 1300 SF or so. Garages in basements. Condominiumize them, and sell two of the units. I`d try to turn the basements in the units I kept into suites.

4-Do a 5 unit place. Now the units go down to a gross width of 18 feet. I could make them three bedroom units, but the secondary bedrooms are only 8 1/2 feet wide if I do that, so I`m wondering if they should just be two bedroom units instead? In this scenario, I condominiumize it, and sell two or three of the units. Basically I`d sell enough to get the price on the kept units low enough to cash flow. Again, I would suite my units if possible.

5-Design a building, get the permit, knock down the house, and sell it in a state that an investor can sign the papers and start building right away. I`d then take the cash and buy existing properties. I would expect to make some money on this, but I really have no idea how much. Has anyone done this? Any idea what % one could likely to increase the property value, if all other things remain constant?

Well, that`s all I have for now. A big thank you in advance for those of you who have taken the time to read this far. I really appreciate it, even if you don`t answer.

Thanks
Keith

 

[Thomas Beyer]

the more units you build the better !

find out if you can sell 5 condos ..

is R3 zoned for 5 units ? or 3 ? or 4 ? so, go to the city / town planning folks and ask what is the maximum density you can build .. maximum height, minimum yard set backs ...

then, get a designer to draw up such a 5-plex ..

in parallel, do some market research, talk to realtors .. could this sell in this town .. at what price / unit ?

then, get a builder to give you a price estimate to build it

then, get the financing in place .. i.e. your own cash + banks money

then, find a contractor or general contractor that can build it (after the old house is knocked down .. which costs some money too, btw)

then sell them

easy .. but a lot of work .. but very profitable ..

then go to Hawaii on your new yacht !

 

[retiredby50]

Thanks for your input, Thomas. I really appreciate you taking the time to share your knowledge and expertise. So it sounds like more, smaller units are more profitable than less, larger ones. i suspected that, but wasn`t sure. I will do some more number crunching

I will talk to the town. I haven`t heard of any restrictions to size, but I believe 5 shouldn`t be a stretch.

I will also talk to a realtor there, tho I find they overstate the potential. They usually want the person to go ahead with the project, so I find they often are optimistic with selling prices. I will also find out about similar sales in town.

One more question:

Because I`m wanting to keep as many as I can, while shooting for positive cash flow(likely 2 of the 5), I would want to suite the basements of those units. Should I have it designed WITH the suites, and install the secondary suite up front, or build the thing and make that happen later? I would think it would be easier to have it all on one permit, no?

Thanks for your time.

Keith

Oh, and I suppose I could buy a yacht after 5 units, but I`m thinking it would be more of a rowboat, since I don`t want to go into hock to buy a consumer item. he he he.

...and so it goes

 

[DaveRhydderch]

Interesting stuff. You do need to talk to many people - engineers, architects, lenders, city planners, builders, appraisers - and make a very through business plan. Finding a mentor is likely your best idea.

I do know people who make a lot of money this way, so good luck with it.

 

[Thomas Beyer]

QUOTE (retiredby50 @ Apr 9 2008, 12:25 AM) Thanks for your input, Thomas. I really appreciate you taking the time to share your knowledge and expertise. So it sounds like more, smaller units are more profitable than less, larger ones. i suspected that, but wasn`t sure. I will do some more number crunching

I will talk to the town. I haven`t heard of any restrictions to size, but I believe 5 shouldn`t be a stretch.

I will also talk to a realtor there, tho I find they overstate the potential. They usually want the person to go ahead with the project, so I find they often are optimistic with selling prices. I will also find out about similar sales in town.

One more question:

Because I`m wanting to keep as many as I can, while shooting for positive cash flow(likely 2 of the 5), I would want to suite the basements of those units. Should I have it designed WITH the suites, and install the secondary suite up front, or build the thing and make that happen later? I would think it would be easier to have it all on one permit, no?

Thanks for your time.

Keith

Oh, and I suppose I could buy a yacht after 5 units, but I`m thinking it would be more of a rowboat, since I don`t want to go into hock to buy a consumer item. he he he.

...and so it goes

maximize the # of suites UPFRONT .. and make them all legal .. then you can sell them LATER (say 10 years from now) as condo if you so chose ..

financing is key .. likely the banks wants to see 25% CASH in the deal .. so if it costs $800,000 to build 5 suites incl. lot .. you have to have HARD CASH of $200,000 !! you need construction cost and detailed build plan before you get the financing $s .. so some $s are required to pay for those plans (and the land)

btw: You have to think anyway, so might as well think BIG .. so think: YACHT .. not row boat !

 

[markbrad]

Just thinking of suites in the basements of some of your units. Check with the planning commission. We are building a duplex, and were (are) going to put suites in, but it turns out semidetached dwellings (duplexes) are not eligible for suites. We are still going to put at least one in, but even when it comes to financing, we can only use one suite (per half duplex) in rental income, as the other is not a conforming suite. Just something else to think about along with the yacht!