Feasibility Study to determine the profitability of investing in 423 NE 27th ST, we first maximized the residential units allowed, required parking, and minimum setbacks—on the ground and above the eighth floors. We also repositioned the tower for an amenities area over the plinth.
With the following conservative assumptions, our return on cost was 3.92%:
- Number of units: 90
- Average unit size: 1040 SF two BR
- Average unit rent: $3,312/mo
- Average Hard Cost: $215/SF
- Purchase Price: $7.7M
Adjusting the purchase price to $25M would make the return on cost 2.99%.
We can reduce the average unit size, OpEx, soft cost, and contingency assumptions for a better return. We can also increase the rent, but at some point, it would be too optimistic and risky to build.