Unique Dormont infill housing and other updates (Pittsburgh, Allentown: sale, salons)

[jea6321]

Originally Posted by erieguy

Bingo

It truly amazes me how some think they know other people’s business and how much money they should be allowed to make.

its also completely speculative to think the developer is making a killing. If said developer is not themselves the contractor, I can assure anyone that they have way more than 200k hard cost into these units. And if they are the contractor, they have employees to pay, subs to pay, permits, inspections, trucks, tools, insurance downtime(where they are still keeping their employees on to retain them) etc.

for anyone that thinks they can do carbon copies of these for 300k, I'm here waiting to buy as many of them as you can churn out. Let me know when they are ready.

[erieguy]

Originally Posted by jea6321

its also completely speculative to think the developer is making a killing. If said developer is not themselves the contractor, I can assure anyone that they have way more than 200k hard cost into these units. And if they are the contractor, they have employees to pay, subs to pay, permits, inspections, trucks, tools, insurance downtime(where they are still keeping their employees on to retain them) etc.

for anyone that thinks they can do carbon copies of these for 300k, I'm here waiting to buy as many of them as you can churn out. Let me know when they are ready.

Bingo

[chao]

pretty sure that cost way more than 200k in construction, a regular nice 3bed 1.5bath would cost around 200k depends how you want it.

is that a duplex or multi? I see 2 entrance, it doesn't make sense to build a new construction for 4+ bed and bath and sell it for 500k, but if it's duplex of total over 1M, that's more like what construction company would do.

if you think that's crazy, you should check out other area like Southside
https://www.zillow.com/homedetails/1...64713093_zpid/

2bed 4 bath row house asking close to 700k each


however I agree with 500k, I would look for better area, you could get nice house in any Pittsburgh area include SQ hill, shadyside, fox chapel or mt. leb...etc


% wise, fried rice and spring roll is way more expensive than housing consider the material

[svband76]

Originally Posted by chao

pretty sure that cost way more than 200k in construction, a regular nice 3bed 1.5bath would cost around 200k depends how you want it.

is that a duplex or multi? I see 2 entrance, it doesn't make sense to build a new construction for 4+ bed and bath and sell it for 500k, but if it's duplex of total over 1M, that's more like what construction company would do.

if you think that's crazy, you should check out other area like Southside
https://www.zillow.com/homedetails/1...64713093_zpid/

2bed 4 bath row house asking close to 700k each


however I agree with 500k, I would look for better area, you could get nice house in any Pittsburgh area include SQ hill, shadyside, fox chapel or mt. leb...etc


% wise, fried rice and spring roll is way more expensive than housing consider the material

Pretty sure it is $525k x two units = $1,050,000. Though it is not clear.

Anyway, I'm not saying that some money wasn't put into it, just that for the asking price nobody will buy there. An older grand home on quieter tree-lined Espy Avenue, yes.

[erieguy]

Originally Posted by zalewskimm

Pretty sure it is $525k x two units = $1,050,000. Though it is not clear.

Anyway, I'm not saying that some money wasn't put into it, just that for the asking price nobody will buy there. An older grand home on quieter tree-lined Espy Avenue, yes.

The market, as always, will dictate the price.

Why did you previously say the flipper is being greedy?

[guy2073]

I use to build houses, go to pella and price out the windows and doors for that house. Iron rails use to go for $120 a foot. Price out the hardi-board, lumber and truss package. Price out the 2 iron balconies then let me know how much of that 200k you have left to finish the homes.

[jea6321]

Its 2 units. 3100 sq ft each. Avg cost to build out decent quality new construction in Pittsburgh is $135-150 per ft. Plus the cost of the lot. Developers have incentive to do townhouse units because they can cut down on some of the site prep costs. So back of the envelope math says the following:

Perhaps the developer got a good deal and has only 125 per ft X 6200 sq ft. plus the land cost of 40k. total basis of 815k. Say the units sell for 500k each. After closing costs, it would be reasonable to believe the profit is in the ball park 105k. 105k profit on 815k basis is about a 13% return on investment. I would imagine they used financing and most banks are going to want around 30% hard cost to the developer ( possibly as much as 50%). So now you have 245k cash outlay, and profit of 105k minus the interest on the loan, so call it 95k. cash on cash ROI of 39%. Pretty good, but what did the S&P do last year? 20+%, so an alpha of 15% to take on this project over parking it in an index fund. What if the units only sell for 475K? 450K? This is also negating any carrying costs such as insurance, utilities, taxes, etc.

I understand that sometimes profits of developers may seem high, but its all relative to the cost basis. Nobody would take on the risk of developing (or flipping) if the risk/reward was not higher than expected avg returns of the stock market.

[guy2073]

Originally Posted by jea6321

Its 2 units. 3100 sq ft each. Avg cost to build out decent quality new construction in Pittsburgh is $135-150 per ft. Plus the cost of the lot. Developers have incentive to do townhouse units because they can cut down on some of the site prep costs. So back of the envelope math says the following:

Perhaps the developer got a good deal and has only 125 per ft X 6200 sq ft. plus the land cost of 40k. total basis of 815k. Say the units sell for 500k each. After closing costs, it would be reasonable to believe the profit is in the ball park 105k. 105k profit on 815k basis is about a 13% return on investment. I would imagine they used financing and most banks are going to want around 30% hard cost to the developer ( possibly as much as 50%). So now you have 245k cash outlay, and profit of 105k minus the interest on the loan, so call it 95k. cash on cash ROI of 39%. Pretty good, but what did the S&P do last year? 20+%, so an alpha of 15% to take on this project over parking it in an index fund. What if the units only sell for 475K? 450K? This is also negating any carrying costs such as insurance, utilities, taxes, etc.

I understand that sometimes profits of developers may seem high, but its all relative to the cost basis. Nobody would take on the risk of developing (or flipping) if the risk/reward was not higher than expected avg returns of the stock market.

This is why i stopped building homes, the amount of hours that i spent managing a project was not worth the 12% return.

[jea6321]

Originally Posted by guy2073

This is why i stopped building homes, the amount of hours that i spent managing a project was not worth the 12% return.

agreed. On occasion you see a project where someone hits it out of the park profit wise, but most projects just don't have those numbers. You need to use the economies of scale to your advantage and have systems in place to really make decent profit. Just doing a single or couple projects a year isn't all that profitable. Add in a flop here and there and the short term taxes if you complete them in under 1 year and just buying dividend paying indexes starts to look pretty nice.

[fjy3]

Originally Posted by Doowlle34

All,

Just wanted to toss out a few updates from Dormont:

1. A new infill housing option has just gone on the market, see https://www.pittsburghmagazine.com/h...DnviPmNo-tzm3w

This replaced a property that sat abandoned for several years (check the oldest Google street view photos to see how overgrown the property was in 2007 or 2008). Obviously, the price is quite dear, and likely quite above what any single family (detached or otherwise) has sold for in Dormont. That said, I believe the builder/marketers consider that this is a fairly unique housing option and worth the premium.

2. A new barbeque place, Paulie's Smokehouse, opened up on Potomac Avenue, see https://www.facebook.com/pauliesbbq/.

3. Arsenal Cider House announced that they will be opening a location in Dormont, see https://www.nextpittsburgh.com/city-...cider-dormont/.


4. Right on our border with Lebo, Jose and Tony's was replaced with a new Dominican restaurant, see Zorros Dominican Restaurant | Empanadas - Sangria - Fun.

Mike and Tony's is also coming to Dormont! They are taking over the Tom's Diner/Vasta building. They are currently gutting the interior of Vasta. I have no clue when they plan on opening. This is all very exciting news! I especially can't wait for Arsenal Cider House to open! Paulie's BBQ definitely isn't the best BBQ I've had, but it's not too bad. It's typical pub food, and it's kid-friendly.

I'm happy to see all the cool new businesses.