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?
The standard land value and the final market price do not always exactly match. There can be significant differences, and the standard land value usually represents a minimum price. Especially with this size, it may not be possible to apply the full price per square meter, depending on how the land can be used.
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Hausbauer111 Jun 2018 11:04Well, then it should be possible to get a fairly accurate estimate already. Of course, demolition and disposal costs must still be deducted, as well as any encumbrances, if applicable.
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HilfeHilfe11 Jun 2018 11:35kaho674 schrieb:
What exactly do you mean by development connections? The old factory building is fully connected (sewage, water, electricity, phone all available). Is something still missing?
The price per square meter in DD varies so much, I’m not sure what to use as a reference. When I look on real estate sites, one asks for over 700 euros, another 240. Location of course plays a crucial role. But the plot is not in some outlying area or annexed small village. It is actually within the city. So 200 should realistically be possible.
But first the family needs to decide what they want. Also, check with the city what is possible in terms of building. That can take time... And all utilities are in top condition?
I guess you don’t really believe that if everything around has been rebuilt.
Do yourselves a favor, don’t act like a property developer.
Sell with all encumbrances.
Having sewer connections sounds good, but if the site is repurposed, the main connection might still be usable, while the rest needs to be removed and rebuilt according to new road layouts and plot arrangements. Seeing the work the utility crew has been doing here for the past 2 years (!) … wow.
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HilfeHilfe11 Jun 2018 11:39and factory buildings
was DD not bombed out? If a small excavator hits a few bombs there,
you'll have some serious costs on your hands
was DD not bombed out? If a small excavator hits a few bombs there,
you'll have some serious costs on your hands
