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Updated about 8 years ago,
Need help analyzing a deal for investment
Hello everyone so I live in Staten Island, NY who's market seems very over valued and sometimes crazy when it comes to home prices. To make a long story short and simple, I have come across a single family property right around the block from my current residence and at first glance I think it could be a great opportunity.
Like I stated the house in around the block from my current residences on a beautiful block and great neighborhood, I am very familiar with this area since I live there. Great schools close by, low crime, residential tree lined block with easy access to transportation as well.
The house that is currently there is a complete gut job, it is disgusting which is okay and what I think makes it a goo opportunity. The property is 40X 153 and the lot is 6,100 sq ft total. A lot of opportunity to renovate existing property expend and go up a level, to build a 3,100 sq ft home.
I would estimate construction cost to be around $125,000-$150,000 and the property is being listed as $490,000 (which is somewhat negotiable). I am having a hard time seeing if the current property is over priced or if this could work out to become a good deal.
Directly next door they just built a 2,464 new construction home on a 4,566 lot and it was just sold for $787,000, and similar listings in the area are suggesting anywhere from $300-360 a sqft. so even though on paper the numbers work, I just am skeptical on the purchase price being 490k for this dump of a house.
At a quick glance, 490k for property acquisition 20k closing cost, 150k construction cost equals around 660k total investment. (PLEASE LET ME KNOW WHAT I AM MISSING). If comps are trading at 300-360 lets just say a $300 to use the more conservative number, 3,100 sq ft home and $300 per square foot is 930k, which leads a margin of profit somewhere in the upper 200k.
Please let me know your thoughts, PS my farther is a builder so if price for construction sounds cheap that could be why, it will not be outsourced to a contractor,