Quaint little fixer upper

[Richard]

Is it realistic to think a building in this location will be saved, as opposed to one in a more prime location?

everything is relative,once that more prime location increases in value people look to less relevant neighborhoods.

Everything else is calculated risk,where was the city at 5-10 years ago and where will it be 5-10 years from now,if you stick 335,000 into it can you buy simular elsewhere in the city?

Make 20% of the units below medium market rate and HUD steps in with partial funding,now you are down to less then $150k out of pocket.

Once a few units are rehabilitated in the neighborhood,get the newspaper out there and pump up it’s the next hot spot.

There are few cities in the county where you do not find high dollar properties surrounded by neighborhoods that you would not even dream of going out after dark.

Besides,they said Detroit will be under 10’ of water in a few years,so if you get tall properties now,when Detroit becomes the next Venis Italy the upper floors will be worth millions,step out into your boat and putter off to work.

The problem with it being a LB property is you could not buy it and stabilize and mothball it for a few years if need be,so there are no protections,if you look at the back wall in the photos of the one Dave posted,it appears the steel above the windows is gone or in bad shape and looks like from the picture anyways as if that wall will not last much longer unless it is stabilized soon.

[Richard]

That's the historic Shelbourne. A vacant 21 unit. Recent sales report says someone scooped it up for $212K on May 7, 2021. https://www.howardhanna.com/Property...old/2210018174

It looks like a work in progress where someone ran out of money trying to fix it up because it still has glass on more than half the windows from the front and the ones missing glass are boarded up with chipboard/plyboard that surprisingly the owner managed to paint most black. It doesn't look like the units were exposed to the elements, but the listing description says it's a full gut renovation though the original hardwood floors are still restorable, so compared to across the street it doesn't sound like a full gut.

Perhaps you could get away with just painting the walls, sanding the floors, feeding some pex plumbing--there's no way the copper is still there [[https://plumbingperspective.com/leak...laced-with-pex) and running armored cable wiring along the baseboards. The steam boiler pipes might still be good. Depending on the condition of the inside--I could see it still being worth $212K.

Considering the sqft that is or looks like a pretty good deal.

The problem becomes when deal with historical properties is the demand to meet current code,the building was safe for occupancy for over 100 years.

We went through that with a building department and windows on a historic hotel,we set up an entire fabrication shop in the kitchen and hired somebody full time to recreate the original sash windows 654 sets of them.

The building department refused to allow occupancy because they did not meet the 150mph wind code for Florida.

Took it to court and won based on the historical aspect and the previous windows made it through 125 years of hurricanes.

Even when you look at these projects and bringing them up to code,the basic safety things are understandable but a lot of stuff is way over the top and adds thousands of dollars to the bill.

Even ones expectations of how it should be adds to the cost and increases average rents,gotta have granite and stainless steel and all the other goodies but not want to pay for it.

To me that is the charm of living in historical buildings,the originality and functionality of those days where people were not making a lot of money.

[Gistok]

Besides,they said Detroit will be under 10’ of water in a few years,so if you get tall properties now,when Detroit becomes the next Venis Italy the upper floors will be worth millions,step out into your boat and putter off to work.

Huh? Where did you get that impression? We're 600+ ft. above sea level, so we are not impacted by rising sea levels. We will have other issues, such as lakeside flooding and shore erosion, but with less ice covering on the Great Lakes, more water evaporates in the winter months.

The oscillating record highs and record lows of the Great Lakes has only been a difference of 4 ft. over the last century. We are about 1 ft. down from our record highs of last year.

Even with increased rainfall [if caused by Global Warming], the open waters in winter months will help counteract rising lake levels, via evaporation.

[Satiricalivory]

Besides,they said Detroit will be under 10’ of water in a few years,so if you get tall properties now,when Detroit becomes the next Venis Italy the upper floors will be worth millions,step out into your boat and putter off to work.

Huh??? Who says that? Are you drunk?

[davewindsor]

...

Everything else is calculated risk,where was the city at 5-10 years ago and where will it be 5-10 years from now,if you stick 335,000 into it can you buy simular elsewhere in the city?

Make 20% of the units below medium market rate and HUD steps in with partial funding,now you are down to less then $150k out of pocket.
...

You're gonna need spend a lot more than $335K to make the Laredo rentable.

[Richard]

You're gonna need spend a lot more than $335K to make the Laredo rentable.

Depends on your target market,I do not think you will be able to command $2500 a month rent in that neighborhood at this time,so if your target is $800 per month you are going to do accordingly.

So between that goal and actually looking at it and running the numbers who’s to say what one needs to spend.

Biggest cost per unit would be the kitchen and bathroom and you are not creating a spa or gourmet kitchen,in that price range one is looking for clean and neat without critters running around.

[davewindsor]

Depends on your target market,I do not think you will be able to command $2500 a month rent in that neighborhood at this time,so if your target is $800 per month you are going to do accordingly.

So between that goal and actually looking at it and running the numbers who’s to say what one needs to spend.

Biggest cost per unit would be the kitchen and bathroom and you are not creating a spa or gourmet kitchen,in that price range one is looking for clean and neat without critters running around.

And how much is a new elevator with all the safety devices that an insurance would be willing to insure going to cost? The building dept is not going give a 4 storey building an occupancy permit without an elevator--in Ontario, anything over 3 stories requires an elevator and I'm sure it's the same in Michigan. The windows are all broken glass/missing and it's been exposed to the elements for years, so it's a complete gut. Those buildings are usually wood framed which will be seriously warped from all the rain and snow getting in, so the building dept is going to make you replace a lot of the joists and put in new plyboard floors in an era where lumber has gone up 300% in the past few years. The ESA is going to require all new wiring with a plug on each wall when you start applying for permits. The Laredo would run well over a million in rehab costs easy for simple units. Plus ,once your adjacent neighbors realize what you're doing, they'll jack up the prices of adjacent lots for your parking lot. I remember talking to a rehabber in Palmer Park that rehabbed something that looked very similar to the Laredo and he spent millions on it and that was a decade ago. Luckily, he got all the grants and was in the NEZ zone. The building dept even required him to put in a sprinkler system on each floor and into all the apartments which requires a much larger water main.

Not saying it isn't worth it. A building like that in average condition, but still up to code, fully rented would sell for $2.2m USD in downtown Windsor easy, so a fully renovated one in Detroit would probably have that kind of value too in this crazy real estate market. But any lender including the land bank is going to want to see serious skin in the game like 50% down.

[Richard]

No wonder nothing gets fixed up there,people pull numbers out of the sky and say,that’s to much lol

My join date was 2010 ,shortly before that I actually cost estimated Packard,literally down to the light bulbs and what it would take to phase rebuild it as commercial industrial space.

I had tenants lined up for 800,000 sqft,everybody said it would take 30 million just for the first phase,you know the condition it was in,my actual make ready number was 5 million,with the tenants in place it would have shown a 200k return over and above expenses. That just based on 1/4 of the property at that time.

Also based on receiving zero tax credits or any outside government assistance,because at that time the governor had canceled out any incentives for anything.

Remember also they were getting ready to bankruptcy the city and they did not want anything positive happening that would show there was really no need to take that step.

One really cannot throw numbers out there without doing due diligence.

I can guesstimate pretty close because where you may have wood frame water damage,we deal with wood frame water damage combined with 100 years of termites munching away,plus I have been kinda doing it for 30 years.

It’s not a 22 or 21 unit building,it’s 22 or 21 cubicles how much does it cost to plumb,electrify and sprinkle each unit,if it takes 1 million to rehab that place I should have been a contractor up there,I could spend all year in the Bahamas instead of a few months.

I understand your pricing outlooks because contractors from up there move down here and start giving people kitchen estimates starting at $60,000,they learn quick.

Before the materials jacked up,I could build a brand new 1200 sqft 3 bedroom house for what you guys charge to remodel a fricking kitchen and we have codes that add to the cost that you guys would not even dream about.