Today’s question comes from Matt who asks:
I have a property that we are considering buying that is in a hot neighborhood. The rents in the area are $2,500 a month for a 2BR apartment which is strong for the city as a whole. The city is a rustbelt city that has seen a lot of growth
The subject property was an industrial site that likely has contamination. The phase 1 indicates there is lead in the ground and there are likely petroleum products in the ground as well.
The seller is pushing for a closing of 30 days after completion of the environmental phase 2.
The existing building is about 19,000 SF of structure above ground and we could ultimately build about 27 apartments in the existing structure. The land is $500,000 and it would likely require about $500,000 in environmental remediation costs. It’s likely that the site would qualify for 100% of the site remediation to be government funded.
What do you think about this deal?
Host: Victor Menasce