smh wrote:I wish I understood better why developments like this fail. It looks to me like a decent parcel. Mostly because it includes the lot next door which would be great for additional infill. Especially after Grand is narrowed to 3-lanes.
A simple and very real world analysis:
You purchase 1612 Grand and develop 18 apartments. Apply a conservative rental for these 18 units and you estimate $1,200 net rent per month from each of the 18. This provides $21,600 per month income.
$900,000 purchase + $2,500,000 rehabilition and associated costs = $2,400,000
$2,400,000 financed at 6% for 20 years = $17,195 per month loan cost.
$17,195 loan
1,000 prop tax
2,000 leasing/operations/security
1,000 insurance, common area utilities and repair reserves
$21,195 operations
This leaves you with $400 per month if everything goes right. Not much margin for error and a lot of work and risk for a return that your down payment could generate in a lot of other ways.