We just put property #3 under contract, and hope to close by the end of the month.
This one is a bit of a flier, but it easily has the most upside. Basically we bought a piece of dirt with a structure on it in an up and coming neighborhood. Honestly we are probably 3-5 years early on the neighborhood.
We like the property a) It is a 3 bedroom, 2,200 square feet house with an open floor plan about a mile or so from the Dallas downtown, and it sits less than a mile from the medical district. b) It is relatively cheap, at $185K, our payment including taxes and insurance should be around $1,200/M.
Optionality – Def: The value of additional optional investment opportunities available only after having made an initial investment. The options are what make this property an exciting acquisition.
- We bought this property FSBO, we believe if marketed correctly, we could sell the property tomorrow for $225K.
- We could do a fix and flip. The place needs some work, but that $225K number would go up with some improvements.
- We can live in it as it is, in fact we will for at least a year. The place is large, it has an open floor plan and plenty of place to put our things. The front structure was about 900sqft built in the 20’s, and has an addition in the back providing an additional 1,200-1,300 sqft. The addition was permitted, but honestly the workmanship is sub standard.
- The property is single family but zoned multi family, the layout of the property could easily be turned into a duplex.
- We can rent it out as a single family home, If the place is fixed up a little it should bring in between $1,500-$2,500/month in rent. The low end could be gotten now, the high end would be if we invested an additional $15-20K into doing a few things (floors, reconfigure a couple of bathrooms, paint etc.)
- In the future we can build on it. The property is huge and literally on the top of a hill, and there are a fair number of new modern townhomes and condos going into the area. We believe we can tear down the existing house and build 2x three story townhouses with rooftop decks that would have an awesome view of the downtown skyline. And then we could sell or lease one or both of the new townhomes (4 more options)
- Sell one, live in one
- Sell both
- Lease one, live in one.
- Lease both
- The property sits in the middle of 4 properties that another developer was trying to put together and flip as a block. The 4 properties combined were on the market for $1.3M, or about 66% higher/lot than we are paying . Granted it didn’t sell at that price, but it shows that developers are moving into the area, and suggests we might do well to just live in it/rent it out over the next 3-5 years. Sitting in the middle, we have the option to buy additional properties and develop them ourselves, or put together all 4 and sell them as a block.
Will let you know how things turn out.