First post - wondering if anyone has exp in LRA properties? I'm looking at a few, wondering if people can guide me through the process - typical costs, issues, bureacratic issues, etc.
I'm sorry that no one has responsed to your post. Porbably the OP is long gone.
But I would just call LRA and talk directly to them.I've had some conversations about LRA property over the years with city officials and while I didn't end up buying anything, I found those officials very straightforward in the first phone call aobut what they would require.
In one case it was a totally adorable cute photogenic (I mean CUTE!) house in McKinley Heights that had two brick walls falling down. LRA said up front that they expected a plan that showed evidence of available funding to complete the renovation, one that including rebuilding both side walls. I declined.
Someone else did that job on that cute house and I'm glad it was not me.
Didn't see the original posting - sorry. I bought a house from LRA so might be of some help. Let me know what questions you have and I'll try my best. Some things to get out of the way, though:
1. As mentioned above, LRA will require in every instance evidence of your financial ability to complete renovation of the building you want to buy.
2. LRA is not responsive to low-ball offers. They have a price and will not likely deviate from it - and if they do, the difference will be negligible.
3. A good rule of thumb for these buildings is generally $100/sq ft. It can be much less if you do a lot of the work yourself or have handy family members. You can also bring the price down by being really cheap with the finishing work, but that's hard to do if it's not a straight up investment/flip.
4. Don't assume that LRA needs to or even wants to sell you its building. Don't go into the process with the attitude that you are doing them a favor by giving them an offer on whatever derelict shell you have fallen in love with. It's all the same to them and they'll collect their paychecks either way. Dot all your i's and cross all your t's and provide them all the paperwork and information they ask for.
5. The whole purchase process took about 5 months from the date we submitted our first offer to the day we closed on the property. If your neighborhood has a redevelopment or neighborhood group, someone in their office should be able to help you through the process.
6. Do it. It is a really incredible thing to bring one of these houses back and is worth all the pain and suffering.
I've heard that $100/sqft figure before - does that refer to the building only, or the building and landscaping? I can't see how the figures stack up regardless for that cost - we're talking about a $400,000 rehab expense for a building worth maybe $100,000 if it was in pristine condition. I mean, you can build 3 new houses for that cost. My budget for any building wouldn't be more than $70,000.
You're looking at a 4,000 sq ft LRA building? I think $70-100 is about right if you're contracting for all of the work. There are certainly parts of the city where spending $100/sq ft on a rehab won't get you your money back on the market.
The lot is ~4,000sqft - not sure about the building itsef, hence my concern. Yeah, there's no way I'd sink $400,000 into any building unless it was 10 units. There's no money to be made on a property like that - heck it's not even a good investment for an owner-occ.
The amount does refer to the building only. It's not far off - take a 1,900 sq ft 3bd/2ba home in Forest Park Southeast. Buy it from LRA for $5K or so and then spend $80/sq ft = $152,000 + purchase price. With historic tax credits, you may save 25% of that $152K and gut rehab homes are selling for $200K. What's the problem?
^ that is more doable, but still more than I'd want to be spending. The idea was to turn it into a rental property. Found a couple of duplexes in Dutchtown that looked appealing. At $80,000 investment (tops 100k), at $500 rent a month per unit (or more) I'm making back money in under a decade and it's liquid. At $150,000 that's a longer term investment and the risk is greater. Keen to minimize risk and maximize profit!
Well, if it's rental property you have two options to get your cost down:
1. Cheaper build-out and finish, or
2. Pursue state and federal historic tax credits.
Cheap floor finishes, linoleum, cheap appliances/cabinets, lighting, cheap windows and bare minimum masonry work can bring your price way down. So can the tax credits, which for income-producing property can bring in as much as 45% of your redevelopment costs. Of course, this means you have to pay more and jump through the state's hoops. It can be a great aid to development but a lot of people decide they aren't worth the trouble.
I can add more to this thread in a couple weeks when my work schedule gets back to normal as someone who is doing an LRA rehab, and also works with people to help them through the purchase process. But, what I want to add right now is to consider very closely all of your costs associated with the project and know your building inside and out. Abandoned buildings have a way of hiding problems that can get very expensive when you are too far in to turn around. LRA buildings are a labor of love. The key to an individual LRA rehab is doing whatever work you can yourself. Also, get insurance. I would be out $30k and not have a building anymore if I didn't have builder's risk insurance. As it is, I am ridiculously over budget and way behind schedule, but that was covered by insurance. On the flip side, except for the foundation I have a brand new building.
None of this is meant to scare you away from the idea. It is so much fun and you are making a real difference in the City, whether LRA cares or not. It really comes down to building selection and your financial means and personal abilities.
Thanks for the advice. As I don't live in STL at the moment, I wouldn't be able to do any of the work myself. I'd just be checking in from time to time. But the tax credits make it interesting. I may explore those. The LRA properties that I'm looking at are generally in better condition (read has all 4 walls ) than bsever's. I will look into the insurance as well.
Bsever, how much did that project set you back? Looks to me about 150-200k...
