OK, I'll admit I'm venturing into uncharted territory for me. I've been talking with my next door neighbor for some time about going together to develop some kind of rentals. She's a high-end SFH building contractor. She has a little extra cash, we have a little extra cash. A friend of hers stumbled onto some land in a small town near here that is anxiously looking for a buyer. I think we can get it for less than $15K/acre. Our idea is to build "A" or "A-" townhouse-style apartments to rent out.
Facts to consider:
The market seems to be hungry for nicer properties. Her friend says that there is a waitlist for his townhomes, but he has no more cash to expand.
Growth in the area is slow and steady - about 2%/yr. But there are several small colleges in the area, two industrial parks and a couple of medical centers (one of them new)
Build cost, including land, would be less than $40/sq ft., for a 1000 sq ft apt,
so max of $40K/door. This translates roughly to $400/mo mtg (PITI) (w/ 20% down)
Rents are currently approx $1200/mo for comparable properties.
It appears to me, that even after management, maintenance, marketing, misc, that this is a no-brainer, mainly because we're "buying" at wholesale.
My only flashing red flag is the fact that over 30% of the townspeople are employed by one company. So I'll def be doing some serious assessment of that company. But even at 50% occupancy, it would still work.
What am I missing?
Facts to consider:
The market seems to be hungry for nicer properties. Her friend says that there is a waitlist for his townhomes, but he has no more cash to expand.
Growth in the area is slow and steady - about 2%/yr. But there are several small colleges in the area, two industrial parks and a couple of medical centers (one of them new)
Build cost, including land, would be less than $40/sq ft., for a 1000 sq ft apt,
so max of $40K/door. This translates roughly to $400/mo mtg (PITI) (w/ 20% down)
Rents are currently approx $1200/mo for comparable properties.
It appears to me, that even after management, maintenance, marketing, misc, that this is a no-brainer, mainly because we're "buying" at wholesale.
My only flashing red flag is the fact that over 30% of the townspeople are employed by one company. So I'll def be doing some serious assessment of that company. But even at 50% occupancy, it would still work.
What am I missing?
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