Fixer project for a contractor or an experienced home builder.
Amanda, is a well-known Realtor in San Francisco area and very knowledgeable about the importance of an improved property. She also understands that there is a ceiling price a neighborhood can absorb while the construction costs remain the same regardless of the neighborhood. Usually, the price differences come from choosing low-medium-high end finishes or adding special amenities. However, when it comes to mechanical, plumbing, electrical or structural part of the house, the costs are the same.
161 Edinburgh St. property is located in Excelsior area, a neighborhood that has a medium price of approx. $700/sqft as per Zillow. Since this property was vacant for a long time, a move-in right away would have been difficult to achieve. Furthermore, the market of families that have resources to go though a remodeling or construction project was quite narrow. Considering improvement costs of $400/sqft, it would be quite challenging to make a profit unless the purchase price is attractive. This narrowed down the market for this listing to professional builders.
Now that the target market was clear, Amanda just had to present developers how financially attractive this listing was, for a real estate development project or a fixer-upper project.
Since small scale developers or contractors don't immediately have available analysts or architects to run feasibility studies, Amanda chose to be pro-active by presenting data from City Structure's Value Added report to the potential buyers.
Based on the data from property's Value Added report, she discovered a possible addition of 1,740 sqft, on top of the existing 2,000 sqft build area (840 sqft finished area). If developed at the maximum potential, the new owner-investor would be able to have a significant return, estimated at 52% ROI.
The Final Result
This information allowed Amanda to build a strong case for this listing. She ended up attracting many potential buyers within 7 days and eventually managed to sell the listing at a whooping price of $942/sqft!
161 Edinburgh Street, San Francisco
Yes, properties fly off the market in San Francisco whenever they have great potential and if they're priced right. Here is a case which illustrates that by showing an attractive development potential, which could yield a great return as a ground-up project or as a fixer-upper.