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?
11ant schrieb:
A professional real estate developer approaches this without emotion and often finds unexpected solutions. Now you’re confusing me again because I wonder how a professional developer would get hot water to the third floor any differently than an ordinary person.
Whether and how the project “develops” depends less on any professionals and more on the lack of funds, I’m afraid.
But I will keep reporting if there is interest.
kaho674 schrieb:
how the professional developer gets the hot water differently to the third floor, Wordplay alert: of course, he’s just boiling with water. But on the plan, he’s going headfirst through the wall. You (who know the same wall in reality) naturally only go through where there is a door. Simplified, but accurate in all essential details.
kaho674 schrieb:
Whether and how the situation "develops" depends less on any professionals and more on the lack of money, I fear. If the g**l is focused enough on profit, they simply bring the necessary capital. “Professional” here relates to “profitable.”
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
Spunk schrieb:
Domestic hot water is insulated and operated with a circulation pump and timer control. There’s plenty of room for debate about what is better or more cost-effective in the long run.The focus is on reducing costs. And in this case, electric appliances are cheaper, heating 5 liters (1.3 gallons) rather than an entire domestic hot water line just because the kitchen is on the opposite end.
kaho674 schrieb:
I’m not sure about the energy saving regulations – it wouldn’t be a change of use and would it be protected under existing rights?I’m not an expert, but my workplace was once expanded. Wasn’t it about the ratio of old to new construction? In any case, everything had to be insulated due to the energy saving regulations… Existing rights, I believe, only apply if you’re renovating a private room or something similar.
kaho674 schrieb:
Now you’re confusing me again because I wonder how a professional developer would get hot water up to the third floor differently than an average person?Katja, I’m not talking about hot water going upstairs, but hot water lines branching very far from the main pipes. This is something a specialist plans. Bathrooms are usually centrally located and more interior. Exterior kitchens are then equipped with appliances to speed things up and reduce costs. I don’t see any problem with that; others heat their entire house with electricity. How is this handled in other apartment buildings? You’re not the first to build four floors.
N
nordanney21 Jan 2019 22:05kaho674 schrieb:
For commercial use, you could save quite a bit on equipment compared to what an apartment tenant would expect nowadays. It starts with underfloor heating. Plumbing would be less and simpler, or there are already rooms that could possibly be reused. Regarding energy efficiency regulations, I’m not sure – since it wouldn’t be a change of use, and there might be existing rights? Workrooms are typically larger. Accordingly, there would be fewer doors and walls, sockets, switches, and paint – basically what a wall needs.
Fire protection probably differs little – there are likely wall suppliers who offer “pre-finished fire walls.”
So, I believe there is a noticeable difference.
And yes, the spaces wouldn’t suit supermarkets like Edeka and similar. They said 15 years ago that they wouldn’t want to move in there. It would be more suitable for online retailers or maybe a carpenter or artist or something like that. Okay, so you’re not really considering developing the property. Just throwing together cheap commercial space for 16 commercial tenants – not offices or medical practices, but simple tradespeople or similar. And that on four floors.
Then you might as well have saved yourself the thread.
I understand making something out of an opportunity property as a project development quite differently. You might generate liquidity for a certain time, but you’re not doing the property any favors.
[QUOTE="nordanney, post: 302984, member: 14669"]So, you’re not really considering developing the property. Just adding some cheap commercial space for 16 small business tenants—no offices or clinics, but rather simple tradespeople or similar. And on four floors.
I believe offices are probably the last thing anyone needs. Plenty of buildings like that stand empty on various city outskirts as investment ruins. Including in DD.
I also don’t understand what your issue is with tradespeople or artists.
Sorry if you’re disappointed, but first of all, we don’t even know what’s going to happen next, and secondly, I’m not a fairy godmother. We simply don’t have the funds for a castle.]
I believe offices are probably the last thing anyone needs. Plenty of buildings like that stand empty on various city outskirts as investment ruins. Including in DD.
I also don’t understand what your issue is with tradespeople or artists.
Sorry if you’re disappointed, but first of all, we don’t even know what’s going to happen next, and secondly, I’m not a fairy godmother. We simply don’t have the funds for a castle.]
N
nordanney21 Jan 2019 23:54kaho674 schrieb:
There are countless buildings like that standing as investment ruins on various city outskirts. I simply don’t want your property to become such an investment ruin due to careless (sustainable) planning. Nothing more, nothing less.
I have nothing against craftsmen or artists. There are plenty of commercial parks like that in our Ruhr area—old silk mills or similar buildings. But none of them are really attractive (not just subjectively). And dealing with four floors is a whole different level. Craftsmen prefer ground floors, while the upper floors tend to attract artists, recording studios, or similar uses.
Rental yields are acceptable relative to the investment, but operating costs are disproportionately high (percentage-wise, since rents are very low). Therefore, little investment is made in these properties, which creates a vicious cycle.