So here’s one I get quite often, and in particular now that I have 14208 Harbor Lane in Paradise Port listed for sale: Am I better off to buy a waterfront tear down or not? It depends. Sorry!
If you are the kind of person who walks into any waterfront house and thinks: “I’m going to have to tear all this out” then don’t buy it. Generally speaking it’s cheaper to buy someone else’s depreciated assets. Just like a car; a building, roof, or sea wall ect. do not depreciate linearly. So, let someone else pay a premium for a brand new sea wall and deal with building it and then you can buy it a few years old for fifty cents on the dollar.
Right now I have a great example of this. 14100 Paradise Point Rd is for sale for 1.275 M for 21,500 s.f. of land and just 2 lots away is 14062 Paradise Point Rd asking 4.25M for 7230 s.f. including the garage and other non air conditioned space. Based upon recent sales the land is worth 1.1M but there is simply no way the land and building is worth 4.25M. This may be what they spent but there’s no way the market gives it to them. But how about 14208 Harbor? This is a similar eastern exposure lot, not direct intracoastal and a recent sale on the same street places the land value at 950k. This location has 4500 s.f. of buildings on it with a 2004 seawall, septic, ect. At 1.99M asking that’s just 230/s.f. for the house and one could not recreate the house and lot improvements for a little more than 1M. One is better off to buy the depreciated improvements.
