Family friends inherited teardown in Santa Monica - what to do?

[Will Johnson]

Hello all,

First post to the great BP forum! I'm a commercial brokerage agent in LA, but happen to have a family friend who inherited an old house (definitely a tear-down) on a 7,500sf lot in Santa Monica, CA. Nearby new-construction is selling for anywhere between $4-7MM. The lot in question was appraised at $3MM and there is $100K left on mortgage.

The family is split on what they want to do with the property; some members want to sell the lot, others see this as an investment opportunity for a nice rental property. I've come to BP to ask for some advice on what best practice would dictate here: from my point of view, this is a golden opportunity for development, but residential is not my field and I'm not versed in what it would take to utilize a construction/rehab loan for this type of situation.

Would be interested and appreciative to hear any advice on this, especially the pros/cons of using this as a development opportunity.

Thanks!

[Tyler Resnick]

For a inheritance property where family members are split on what to do with it, I would recommend simply selling it. The past of least resistance. Development comes with a lot of ups and downs and requires commitment, buy-in, and a common vision to be successful. If they endeavor to develop without being on the same page, that is how potentially damaging lasting family conflict can form. Some things just aren’t worth it. Cash in the chips and those who want to develop, go develop, those that want to park their money in the bank, go park it.