Adding Dollars By Addition
I have been working on a project here recently that I think is probably do-able in many other urban areas. Our east bench is prime real estate and is populated by small bungalow homes that are less than 1000 sf on the main floor. These homes are selling for about $110 SF.
When placing a second story on these homes and updating the existing wiring, plumbing, and interior finish schedules the "2 story conversion" sells on average for $155-$158 SF.
I contacted an associate that has been doing these every two years and verified his figures with the recorders office and MLS.
He bought a bungalow at (it had 924sf on main and in basement) $178,000
$115,000 in addition/upgrades (added 924sf on second story)
sold it in 6 days on the market for $439,000
Profit not counting listing fees and closing etc. $143,000.
Our market is extremely competitive and this seems to be a way to get the properties without all the competition. You can pay market or close to it and still make a profit.
I figured my holding costs using a negam loan for 12 months at $12,000 and this should take 3-6 at most.
[addsig]
That sounds like an excellant idea! If you can profit over $100,000 in 6 months - I would definitely do the deal. Can you get into these properties with little or no $$ down? How are you going to finance the addition? Just wondering!
Good Luck!
[addsig]
We call this popping the top or even complete scrape-offs, and it certainly would fall under spec building more so than rehabbing. I think just about every city in America that is experiencing growth has some sort of version of this. In Denver they have even recently passed ordinances to limit the popping because it has became so prevelent in certain areas that what was once a quaint neighborhood of 900 sq foot bungalows has turned into 5000 sq foot monsters.
If you find a neighborhood where a lot of the popping is going on by homeowners hiring contractors to do this for them, that seems to be an indicator that the potential for doing spec popping also would exist.
basically herer the lot accounts for about 150K of the appraised value of the home. If you scrape off the lot then a clean lot is worth 200K.
SO, you pay for the lot and some of your building costs (foundation and first floor).
[addsig]
I plan on about $100 a sf for the addition and then some extra for ($20) sf for the rest. These figures are flexible.
[addsig]
Thanks "Cash" for following up with me on this and helping me thru it. Your advice will definitely get me thru this problem.
Jason
can you post the info "Cash" gave you? im having the same exact issue and i need HELP!
We had some roofs estimated for rubber roofs and the prices were pretty cheap. You can google "rugger roofs" and read up on how they work.
[addsig]
what ever you do...do not let some roofer talk you into a "torch down" /rolled roof. Waste of money and very poor quality. I have heard good things about the rubber material.
I just put a roof on my garage and used Odura from Lowes. It is rubber/asphalt and comes in sheets that look like metal roofing. It is cheap, durable, and easy to install.