4 Family on small lot? - Posted by Brian,WI
Posted by Brian,WI on October 11, 2003 at 10:36:31:
A 4 family came on the market the end of July. It was and still is listed for $169,000 with gross rents of $22,600. I know the seller will take $160,000, but no less.
Anyway, I looked at it when it was 1st listed. It’s a 3 unit building up front and another unit above the garage in back. All this on a 60x120 lot.
The seller was there at the time and let me know he’s going to subdivide the lot into 2-30x120 lots and the city is allowing this(I’ve checked and that’s true). He is planning on building a house on the other lot. The new lot line is about 6-8 feet from the side door of the up front units.
Now this property isn’t as attractive,(4 units “squished” together with not much of a yard for all to share, etc.), but it isn’t all that bad of a deal number wise either. It’s in a decent suburb of Milwaukee, and a decent neighborhood within.
Unfortunetly I’m a “motivated buyer”, and need to buy something by year end, here’s why: I’m in a 1033 exchange (don’t ask and it’s not a 1031, long story) and in order to cover my exchange I have to buy something by December 31, 2003. If I don’t my capital gains are going to be hovering around $20,000!
Now I know some people say to take the tax hit and go on until you find a property that makes money “on the buy”, BUT $20,000 is a little too much. I just paid $7,800 this year for using that thinking and not being able to convert a 1031 exchange. That wasn’t so bad and I didn’t have a big problem with it, and have since been able to use the gain for other gains, but again this new one is a little to much.
So, with all that, the main question is…What do you think of a 4-family building(s) being “squished” on a 30x120 lot?