An enormous amount of variables impact the decision to purchase and operate multi-family property. Understanding the market, the cost of renovation and the amount of rent that might be charged is critical. What historic and other tax credits that might be available is also of paramount importance. What is the timeline for return on the investment? Are you willing to be a landlord and essentially be on call for the business 24 hours per day / 365 days per year? Are you more comfortable hiring a management company to handle rentals and management?
Many developers are more comfortable building from the ground up as the cost of renovation per square foot remains relatively constant whereas renovating older property can provide surprises when opening walls. How old are the furnaces, roof, electric, plumbing?
Does the property have clean environmentals. Do you need to have a Phase I or Phase II study done?. If the property can be purchased below market value than any surprise expenses are considerably less painful.
What other types of development have been done in the area and what is projected?
For example, Downtown Albany and the renovation of the Kenmore Hotel, Steuben Athletic Club, Capital Repertory Theatre and the Former Times Union Building into 350 apartments is a clear example of urban, historic renovation. I am proud to have worked on this transaction.
The adjoining Warehouse district is seeing an enormous resurgence. It is critical to understand the area. If you have the vision to see a neighborhood that might realize dramatic change through, for example, the expansion of a hospital, as has happened with Albany Medical Center in Park South in Albany or the expansion of a subway line as we see in NYC or perhaps a neighborhood that is simply set up for improvement and revitalization. Many very successful developers I’ve worked with in Albany, NY, Boston, MA and in NYC have stated , “you should have seen the area 10 years ago.” The message here is that a buyers vision can go a very long way to realizing a successful project.