Kennebunkport Vacation House Development Deal

[Robert Nason]

Hi I am a long-term real estate investor and I have stumbled upon when I think is a great opportunity and I'm looking for a little advice. While looking to purchase a vacation home in Kennebunkport Maine I came across a building from the 1880s that needed a complete gut renovation. After back-and-forth discussions with local zoning officials and I've determined that I can build four luxury apartments approximately 1000 ft.² each. Purchase price is in the low 400,000's after construction costs of $400,000 we are all in for $800,000. After renovation value would be approximately 1.2 to $1.4 million. A couple of issues that I'm having is the town is saying due to the limited parking I would have to call the building an "Inn" which could impact resale down the road. Also if I install full kitchens I would have to sprinkler the entire building. Conversely I could just put in mini kitchens without cooking facilities and save the sprinkler cost of $35,000 and approximately $40,000 by installing mini kitchens. This is in walking distance to all amenities and beach activities. Peak season rentals would be between $400 and $500 per day, off-season would be $250-$350 per day. Any thoughts would be appreciated.