Buy the property nextdoor?

Question

In Denver, I'm considering buying the property next door to mine and renting my current (2Bd1Bath) Single family home.

The property is a double lot and 3 bed 3 bath, but my thinking is it is rare to have the chance to own 3 lots in a Downtown area that is quickly being converted into townhome and higher density living. Both are older homes, the 3/3 was renovated in the 80s.

2/1 home is prime candidate for a tandem house out back or teardown and convert to Rowhome zoning, (properties were recently rezoned just across the alley tandem homes, ADU already zoned ok)

3/3 is newer, on a double lot, but my thinking is that I could hold these for a while, go through the rezoning process and sell both if/when the neighborhood continues to get hot enough for more density building, possibly work with a contractor friend of mine to get going in this direction, or try to do construction of tandem home behind 2/2 and then adu behind 3/3 home.

Are there any resources for spreadsheets or analysis specifically in this realm/that I could show my financiers to calculate the projections on this? Any thoughts?

AJ Wong · Answer

Many of the most successful investors I know accumulate properties in areas of familiarity. You're on the right track..the BP tab 'Tools' has some decent resources, I've also found excellent analysis spreadsheet on Etsy for a few dollars. A key part of your projections will be mortgage terms..check in with @Joseph Chiofalo he has a fun comparison tool and my go to lender for over two decades. Good luck!

Bill S. · Answer

@Eric Einstein so without knowing specifics it is a bit hard to comment on. I will answer in general terms. It is rare that you can tear down a 3/3 for the land and have enough value with the land for building that it make sense. The exceptions are when density can go up 5x or more. That is you can build at least 5 units on the property at near the value of the existing home. You mention, "...convert to Rowhome zoning..." The current flavor in the Denver metro area for up-zoning on individual properties is is "NO!" I rarely see an individual property that has been up-zoned. I doubt this plan would be successful.

Assemblage can create value but unless the zoning is favorable is does not create value. Based on what you have shared, it is unlikely be a benefit.

Probably the thing that makes the most sense is a adding a unit in the back of your current house.

John Mason · Answer

If you go here and put in that address what it shows as a  clue

Eric Einstein · Answer

It would be my new primary residence

Joseph Chiofalo · Answer

Hi Eric,

Would you be purchasing the new property as a primary or Investment?

Buy the property nextdoor?

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