ᐅ Sell the entire property or opt for a partial sale with reinvestment?
Created on: 10 Jun 2018 13:41
K
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?
Alex85 schrieb:
Connecting the utilities also involves some effort, especially with the demolition involved anyway, so the question is whether €200 per square meter (about $215 per square yard) is realistic (I have no idea about the prices there), if more than €100 per square meter (about $107 per square yard) for utility connections are added on top. What exactly do you mean by connecting the utilities? The old factory building is fully connected (sewer, water, electricity, telephone are available). Is there anything else missing?
The price per square meter in Dresden varies so much that I’m not sure what to base it on. Looking at Immoscout, one seller wants over €700 (about $753) and another €240 (about $259). Of course, location is decisive. However, the plot is not somewhere on the outskirts or in a recently incorporated small village. It is actually within the city. So €200 (about $215) should be feasible.
But first, the family really needs to decide what they want. Also, it’s worth checking with the local council what is technically possible in terms of construction. That might take some time...
11ant schrieb:
...If you split it first so that each family line gets their half, that is a mistake. A division within the family is not currently planned. The division would simply be necessary for the investor to provide us with the money for it.
H
Hausbauer111 Jun 2018 10:06So now it is clear what needs to be done:
- Find out the value of the plot (appraisal; for an initial estimate there should be a benchmark map)
- Check buildability (building authority / planning permission office)
No further discussion makes sense before that.
- Find out the value of the plot (appraisal; for an initial estimate there should be a benchmark map)
- Check buildability (building authority / planning permission office)
No further discussion makes sense before that.
kaho674 schrieb:
The price per square meter in DD varies so much that I’m not exactly sure what should be used as a basis.The land value benchmarks in Saxony are available online at Boris.Sachsen. That is already a good reference point.
AxelH. schrieb:
The standard land values in Saxony are available online at Boris.Sachsen. That’s a good starting point. Cool. However, the values are somewhat disappointing. They list 185, which I believe is not very up to date anymore.
I prefer to rely on values from platforms like Immoscout or similar. Search there for building land directly in the city. Usually, prices are between 300 and 400 euros per m² (approximately 28 to 37 USD per sq ft).
But at least it was confirmed that it is residential building land.
kaho674 schrieb:
I think this is no longer very up to date.I can't say how current the Saxony values are. However, the Boris system here in Hesse is continuously updated. The value of our plot, which we purchased last year, has since increased somewhat.
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