Bought for $1.285 Million in 1993.  Sold for $5.39 Million.  Why I like It.

I like this building. It looks clean, well kept, and like something I would be happy to own. You have 14 apartments, with 13 two bedroom units, plus 25 covered parking spaces. These are big units that give tenants room to stay.

The number I care about is what it would cost to replace it. I would put the land alone at roughly $2 million. Add the cost to build a similar building, and I think the total could reach $7-8 million. Those are my rough estimates from the research I do on land prices and building costs.  

At $5.39 million, the buyer is about $1.6-2.6 million below my estimated replacement cost. That is part of why I like it. But buying below replacement cost does not guarantee a good return. The rents still need to cover the bills and the big units here will keep this building always occupied.  

I do not see this as a huge home run. I see a nice asset that could leave the owner a modest check after expenses and debt payments. I would check the actual costs and major repair needs before counting on that income.

Accelerated depreciation could also be part of the appeal, depending on the buyer’s tax situation and what qualifies.

Sometimes that is enough. Own a good building, collect some income, take care of it, and let time do its work.