ᐅ Sell the entire property or opt for a partial sale with reinvestment?
Created on: 10 Jun 2018 13:41
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kaho674
There is a large property in the family located in the center of Dresden. It is a residential area—surrounded by 6-story or even taller new apartment buildings. The land is currently occupied by a very old factory building. The owners do not have the funds to demolish this building and replace it with modern new construction. On the other hand, the ongoing costs and rental income are just about breaking even. If income continues to decline, the property could financially ruin the family.
So the question is what should happen with this "factory land." It is quite certain that it could be completely redeveloped since there are multi-family buildings all around. Adjacent to this land is the family’s own business property (including land), which is not intended to be sold as it is their livelihood.
The immediate idea was, of course, to sell the entire factory land. Its value is estimated at around 1-2 million (minus demolition costs), without going into details here. The money could be taken, divided among the family, and essentially spent without long-term benefit.
However, there are also grandchildren who are struggling to establish themselves in Dresden. The family would like to support them over the long term and believes that a rental property would be ideal. Coincidentally, the grandchildren are trained in property management and could help oversee the project.
So the idea came up to sell only part of the land to gain liquidity, demolish the old building, and construct a multi-family house—ideally in collaboration with an investor who would buy and develop the other half. Of course, everything would need to be carefully calculated to see if this is feasible and if the land will generate enough value.
Is something like this possible, or is it just a scam? What would you do?
So the question is what should happen with this "factory land." It is quite certain that it could be completely redeveloped since there are multi-family buildings all around. Adjacent to this land is the family’s own business property (including land), which is not intended to be sold as it is their livelihood.
The immediate idea was, of course, to sell the entire factory land. Its value is estimated at around 1-2 million (minus demolition costs), without going into details here. The money could be taken, divided among the family, and essentially spent without long-term benefit.
However, there are also grandchildren who are struggling to establish themselves in Dresden. The family would like to support them over the long term and believes that a rental property would be ideal. Coincidentally, the grandchildren are trained in property management and could help oversee the project.
So the idea came up to sell only part of the land to gain liquidity, demolish the old building, and construct a multi-family house—ideally in collaboration with an investor who would buy and develop the other half. Of course, everything would need to be carefully calculated to see if this is feasible and if the land will generate enough value.
Is something like this possible, or is it just a scam? What would you do?
S
Spritti12310 Jun 2018 22:43Invest 10 percent in precious metals (gold and silver), and the rest in stocks. Choose from the DAX, Dow Jones, or SMI. Large corporations like BASF, Nestlé, BMW, etc. And ideally, hold these investments for decades. This approach offers higher returns and less stress compared to real estate. However, it is best to only use money that you will definitely not need in the coming years.
kaho674 schrieb:
The old factory building is quite off-putting, I’m afraid. It’s still in use, so maybe no one realizes that it’s not actually needed. Money doesn’t stink. From an investor’s perspective, a property with potential can never be ugly.
kaho674 schrieb:
If we sell the entire thing, the immediate question is what to do with the money? Professionals also understand that sellers won’t face a heavy tax burden from such a sale.
Escroda schrieb:
The family thinks they are sitting on a "treasure" and don’t want to waste it lightly. That’s exactly the problem with multiple partners: in a family or potential heir community, there’s always at least one oddball whose ideas of “value” cause projects to fail. Someone has to speak for everyone, otherwise no one commits.
And very important: if a property’s appeal lies in its size, under no circumstances should it be subdivided. Subdivision reduces size.
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
T
toxicmolotof10 Jun 2018 23:5611ant schrieb:
Money doesn’t stink.
[...]
Division makes size smaller Now people are throwing around sayings. So then: If size were the only thing that mattered, dinosaurs would still be alive.
But as often... it depends.
Both are facts that I would like to explain again:
Money doesn’t stink
means: the attitude that the box is so ugly it has to go is wrong. Because this is not what a land developer focuses on.
Subdivision reduces size
means: even in areas where investors typically "look by habit," they do not always find what they want. Simply because some of them are interested in large plots. If you divide the land first so that each family line gets its share, you are making a mistake. Investors do the parceling—later. But not the original seller before development.
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
Money doesn’t stink
means: the attitude that the box is so ugly it has to go is wrong. Because this is not what a land developer focuses on.
Subdivision reduces size
means: even in areas where investors typically "look by habit," they do not always find what they want. Simply because some of them are interested in large plots. If you divide the land first so that each family line gets its share, you are making a mistake. Investors do the parceling—later. But not the original seller before development.
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
H
HilfeHilfe11 Jun 2018 06:4311ant schrieb:
Both statements are facts that I would like to explain again:
Money doesn’t stink)
means: the attitude that the building is so ugly that it must be removed is wrong. Because that’s not what a land developer focuses on.
Dividing reduces size)
means: even in areas where investors usually “habitually look,” they don’t always find what they want. Simply because among them are those interested in large plots. If you divide the land first so that each family branch gets their share, you make a mistake. The investor will subdivide later. But not the original seller before development. 11ant is right. The neighbor is a property developer in the second generation. They only handle financing and planning, so they don’t build anything themselves. The hardest part currently is probably the land itself. Prime plots always drive the price up. Anyone can slap a shell on it. Dresden is booming, so it’s strange that a site is not interesting at all. I also don’t understand why the grandchildren should be hyped. They’re probably your children. Then sell and give them pocket money for a project that fits their scale. In professional soccer, you don’t put two amateur players on the field who will ruin the game. And this project needs money—veeeery much money.
One should definitely check whether the 8000 m² (86,000 sq ft) can actually be developed with residential buildings.
The site development also involves effort, especially due to demolition, and then there is the question of whether 200€/m² (about $19/sq ft) is realistic (I have no idea about the prices there) if more than 100€/m² (about $9.50/sq ft) for site development are added on top.
The site development also involves effort, especially due to demolition, and then there is the question of whether 200€/m² (about $19/sq ft) is realistic (I have no idea about the prices there) if more than 100€/m² (about $9.50/sq ft) for site development are added on top.