What's wrong with this opportunity???
You purchase a Off Campus Student Housing property built in the 1900's for $439,900 at the suggested list price and take out 30yr loan with a 5 year fixed rate of 6%, down payment $150,000. The property is off campus student housing with a net annual income = $5695, zero vacancy, 4 units and is zoned for 5 units. The land value, based on the recent sale of an adjacent property, is valued @ $638,750 (built in equity = $198,850).
The location is in a high demand, high end neighborhood with a sweeping waterview and easy walking distance to trails and services. Annual property appreciation is estimated to be 5%/year. Older properties are being torn down and replaced with high-end condo's.
What's wrong with this investment opportunity??
Comments (5)
your down payment of $150,000 could be better invested somewhere else for a higher return.
Kevin Kaczmarek, almost 14 years ago
Over priced
Don Konipol, almost 14 years ago
I don't think you could finance this situation. First of all there insufficient net income to pay the debt service. Based on what I see an investor would need to be all cash to make this work. I would want to look for a value add that might generate income and would want to be in a position that I could hold onto it for a few years.
Account Closed, almost 14 years ago
That is opportunity, tear and develop however the timing is not there for that opportunity. Submit a price that provides a suitable profit margin to hold the property for 3-5 years. The appreciation and demand is there.
Tom Gidlund, almost 14 years ago
It has virtually no net income for the investment. However, it does sound like it could be a candidate for scraping and redeveloping..
Jon Klaus, about 14 years ago