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4926 212th Street SW
Mountlake Terrace WA 98043

SALE PRICE $950,000

INCLUDING PLANS FOR 15-UNIT
APARTMENT BUILDING

 

JAMES ROBERT DEAL ATTORNEY PLLC
PO Box 2276, Lynnwood, Washington 98036
Telephone 425-771-1110, Fax 425-776-8081
James@JamesDeal.com

BUILD A 15-UNIT APARTMENT BUILDING

4926 212th Street SW
Mountlake Terrace WA 98043

NWMLS # 1582236

 

Dear Potential Buyer:

My wife and I have owned the rental home at 4926 212th Street SW, Mountlake Terrace WA 98043 since 2004. We have architectural plans approved by Mountlake Terrace planning department for construction of a 15-unit apartment building. We will develop it ourselves unless someone buys the project from us for $925,000.

We bought this home because it was on a busy street and because the Mountlake Terrace sign ordinance allows erection of a large, unlighted sign on a street with a high traffic count. I had given some thought to establishing a law office there. However, I have chosen to focus instead on listing and selling real estate with Keller Williams Everett. See www.WashingtonAttorneyBroker.com.

Currently the property is rented to a family for $2,400 per month. Do not go onto the property unless you have signed a contract to purchase the property and unless I am with you. Do not knock on the door or talk with the tenants. They would just tell you to call me.

We have listed this property for sale for $925,000. It is worth that much because we have architectural plans for the construction of a 15-unit studio apartment building with 17 parking spaces. Mountlake Terrace Planning has reviewed the architectural plans and has indicated approval subject to meeting a list of reasonable requirements. 

All reasonable offers will be considered. We would consider the sale of a partial interest.

See photos and videos at this link:

https://www.washingtonattorneybroker.com/4926-212th

Take a video walk through of the property on YouTube at this link.

Right click and open in a new link to read plans and cost calculations.

This property can be developed into an apartment building because the lot is large, around 10,450 square feet. The property is specifically zoned for apartment buildings. Mountlake Terrace wants more housing built, and is cooperative.

If we can sell the property for $925,000, we will sell it. If it does not sell for that price, we will partner with Daniel S., our favorite general contractor, and develop this property ourselves. Daniel will build the building for $100 per square foot, provided that he will receive 25% of the equity in the property. Daniel S. would probably make the same deal with a buyer.

Construction cost estimates:

I have prepared a spreadsheet showing estimated rents and cost estimates. It is posted on Box.com. It is entitled Financing-Rent-Values-Cash-Flow-5-26-2020.

There you will find four construction cost scenarios.

The first scenario assumes that I apply my $700,000 equity in the property and pay nothing more as a down payment. It also assumes that Daniel S., my favorite general contractor, builds the building. He has agreed to build it for $100 per square foot, in return for a 25% interest in the building. Daniel S. has a background in architecture and engineering, and so partnering with him would reduce design and engineering costs. My lender will probably want more than $700,000 down, maybe another $300,000. For that reason, I will be looking for an investor who could inject $300,000 in return for a long-term percentage ownership in the project. I estimate that there would be monthly net income of $4,775.

The second scenario assumes that a buyer buys me out and that the buyer partners with Daniel S who agrees to build the building for $100 per square foot in consideration for a 25% interest in the building. That buyer will have to come in with $700,000 down plus probably another $300,000.

The second scenario assumes that a buyer buys me out and that the buyer partners with Daniel S who agrees to build the building for $100 per square foot in consideration for a 25% interest in the building. That buyer will have to come in with $700,000 down plus probably another $300,000. I estimate that there would be monthly net income of $2,662.

The third scenario assumes that a buyer buys me out and that the buyer does not partner with Daniel S, but who hires another builder who agrees to build the building for $150 per square foot. The buyer would end up owing 100% of the project. To make the third scenario cash flow, the buyer would need to invest probably $1.0 million to have a positive cash flow. I estimate that there would be monthly net income of $3,221.

The fourth scenario assumes that a buyer buys me out and that the buyer does not partner with Daniel S, but hires another builder who agrees to build the building for $200 per square foot. The buyer would end up owing 100% of the project. To make the third scenario cash flow, the buyer would need to invest probably $1.5 million and would probably have a cash flow or $1,279.

The spreadsheet figures are estimates. They are subject to revision. A potential buyer may use this template but must verify his own numbers. Both a PDF and an Excel version of the spreadsheet are posted on Box.com.

The costs could be less and the cash flow could be better if the owner handles his own management and saves 10% of rents, or if the owner can reduce the 5% vacancy factor. If the owner is a Mister Fixit, his maintenance costs might be less than 5%.

The real value of this property is in the land and the approved permits. Fortunately, the lot is big enough for 15 units and 17 parking spaces. Fortunately, this corner lot is zoned for apartments.

The reason for building all studio apartments is that studios require only one parking space per unit, whereas one-bedroom apartments, for example, require 1.5 parking spaces per unit. Building all one bedroom apartments would reduced the number of units to only 11 (17/1.5). While rents are higher for one bedroom apartments, the total rent for 11 one bedroom apartments would be less than the total rent for 15 studio apartments.

Ceilings are to be high, creating room for storage cabinets along the interior walls of each unit up near the ceiling.

The building will have an extra room which can be a common area.

Part of the building roof will be flat, which will afford tenants and guests a place to relax with an expansive view of the neighborhood.

The buyer will have to advance around $70,000 for a performance bond. I did not included the cost of the bond in my calculations, because it is refundable once the building is completed.

Current rental status:

This is a four bedroom home. It is currently rented for $2,400 per month. The living space is 1,770 square feet in size. One bedroom is huge. Two bedrooms are large. One bedroom is medium in size. This is a one bathroom home.

The floors are hardwood and ceramic tile throughout the home, except for linoleum in the bathroom. The home is equipped with ADT security.

We repainted, updated, and remodeled this home in 2019.

There is no garage, but there are three off street parking spaces on the west side of the home. And there is a huge front yard big enough to park several RVs.

If the buyer plans to keep the house as a rental while the buyer is getting ready to build, the buyer may want to inspect the home interior. The buyer may do that, but only after the buyer has signed a purchase agreement and has agreed on price and terms. The offer can be written subject to inspection of the home. 

Sincerely,

James Robert Deal, Attorney and Managing Broker
WSBA # 8103
DOL # 27730
NMLS # 64871

Sincerely,

James Robert Deal , Attorney & Broker
James@JamesDeal.com
PO Box 2276 Lynnwood WA 98036
Law Office Line: 425-771-1110
Broker Line: 425-774-6611
Cell and Text Line: 425-670-1405
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