Property Value Analysis: 8747 No More Rd, Carefree AZ, 85377
There are 2 basic ways to analyze the value of this type of property.
1: By replacement cost: What’s the value of the lot as raw land, and what would it cost to replace the structures & landscaping today. This can be a realistic way to determine the value of a property assuming that a comparable undeveloped lot can be found and purchased, and further, assuming the buyer is willing to go through the ordeal involved in building a custom house in this size and price range. Some people enjoy the process of creating their dream home…. Most however, do not want to go through all the headaches and hassles associated with a project of this scale.
2: The most accurate way to analyze the value of this type of property of course is by comparison to similar properties sold in the same area in the recent past. While there are existing comps for similar homes, there simply are no comparable properties (with such extensive vehicle storage facilities) in this area that are either on the market at this time, or that have sold in the recent past.
I’ve included both approaches in the value analysis of this property below.
Approach #1 (By Replacement cost):
If this lot were for sale raw and un-developed right now, I’ve been advised that it would probably sell for $650,000.
Assuming that the buyer were to build an identical garage and guest house, the replacement cost today for that structure would be roughly $800,000 as follows:
The Garage: 4,200 ft @ $125 per ft = $525,000 (includes new septic, hydraulic lift etc.)
The Guest Apartment: 2,200 per ft @ $125 per ft = $275,000By combining the cost of the lot and the replacement cost of the garage and guest apartment, we come to a total figure of $1,450,000. Of course if I were to start from scratch today with this property, I’d probably build a more substantial 2 story main house which would have a large master suite and study on the upper level, and more elaborate entertaining areas with higher ceilings on the main level. Starting from scratch, I could easily build a 5,000 sq ft home on the footprint of the existing structure, however if you do a little research into the average cost per square ft of high quality custom homes in this area, you will find that they average over $250 per sq foot for frame construction, and roughly $50 more per sq ft for masonry construction. If we take an average of those figures, ($275 per sq ft) we see that the cost of building a modern high quality 5,000 sq ft home would be roughly $1,375,000, which when added to the cost of the lot and the garage & guest-house, brings us to a total investment of $2,750,000 which figure does not include the landscaping.
Approach #2 (By Comparison to Recent Sales in the area):
Note: This following valuation was made in December of 2005 before the renovation of the home was begun.
A neighbor of mine who’s a local developer and broker pulled the comps for me on 4 similar homes (all built in the 1970’s with “Slump Block” construction) which were sold un-renovated in the “Carefree Fore More” subdivision between August & December 2005 & based on the numbers in those comps he came up with the following analysis for the value of my property. Those 4 un-renovated homes sold for an average of $226 per square foot (only heated & air-conditioned space is counted in the MLS average price per sq ft figures)
The main house on my property has 3,586 sq ft of (heated & air-conditioned) space, and the new guest apartment has 2,200 sq ft, therefore at a total of 5,786 sq ft @ $226 per ft the living space should be valued at $1,307,636
The big free standing garage is being conservatively valued at $100 per square foot. If one were just talking about a free standing auxiliary 2 car garage of frame construction with an 8' ceiling with no climate control, he would not value it above $50 to $60 per square foot, however this garage, as you will see, is massively built of split face block, fully grouted & re-barred, with a 12' clear ceiling. It has a 2 stage evaporative cooling system, a full bathroom with a new (2nd) septic system (which serves both the garage, and the guest apartment constructed above it), a 9,000 lb professional 2 post asymmetrical vehicle lift mounted over massive steel reinforced concrete piers, a compressed air system, several custom built work benches & other storage facilities & shop tools, & he's therefore valuing it at $100 per square foot. Frankly, if you were to hire a general contractor to build it today you'd be hard pressed to replace it for less than $150 per square foot with all the extras included, therefore the new 4,200 sq ft Auxiliary Garage @ $100 per ft is being valued at $420,000
With the living space valued at $1,307,636 added to the garage at $420,000, we therefore come to a total value of $1,727,636.
I have not yet finished the guest apartment as there is a good possibility that the buyer may want to use this space as an at home office, artist’s studio or for other purposes. The guest apartment is therefore only semi-finished. At present the interior is framed out with the plumbing roughed in, the heating and a/c system is in, & the wiring, ceiling lighting, windows, exterior, roof, deck, awnings & rain gutters are also completed. The apartment only needs sheetrock, kitchen cabinets, appliances & bath fixtures to be complete. A typical retail budget for finishing the apartment would be $35 per foot, or $77,000, however by using the old appliances from the kitchen in the main house, which are in good condition, the guest apartment can be nicely finished for considerably less. If you deduct that cost of finishing the guest apartment ($77,000) from the number above ($1,727,636), you come to a total value of $1,650,536. Had the property been purchased “as is” prior to the commencement of the renovation, it would have been a very good buy at $1,500,000.
The other factors which contribute to the value of the property are the fact that: A: Its on an oversize (1.3 acre) hilltop lot with fabulous city lights and sunset views which few homes in this area have, B: A massive amount of time and money (over $200,000) has been invested in the landscaping of the property (terracing, fruit trees, etc.) on the property, and C: The real estate taxes, at roughly $2,000 per year are extremely low. As a result of these factors, the property might well appraise at 10% more than the above total.This analysis of course, only compares the property to the sale of similar, older and un-renovated homes. In order to determine what this property would be worth if the guest apartment was finished and main house was fully renovated with new windows & carpeting and a new kitchen and remodeled master bath, one would have to compare the property to other more modern, or renovated homes that have recently sold in the Carefree community. The following chart shows the MLS #, the actual selling price, the square footage, lot size, price per sq ft, and RE Taxes of 22 homes that sold here in Carefree in the later half of 2005. NOTE: I have excluded any homes from this list that were located in guard gated private communities such as The Boulders, or Desert Mountain, as they normally sell for a substantial premium over properties that are not located in guard-gated communities. Of course none of these properties have the vehicle storage facilities of 8747 No More Road.
With the average selling price of new or renovated homes in the immediate area being $344 per sq ft, it is reasonable to assume that if one were to finish the guest apartment over the garage, and finish the renovation of the main house in a tasteful manner, the property should be worth a minimum of $325 per foot or:
5,786 Sq ft @ $325 per ft = $1,880,450 + $420,000 ( for the new garage) = $2,300,450
Since the above valuation was made, a substantial amount of work has been done on the main house. The wall between the original kitchen & laundry room has been removed, with the laundry relocated to a large “walk through” storage closet between the new kitchen and garage. The low ceiling in the kitchen area has been raised by relocating the overhead a/c duct work up into the roof joists. New appliances have been purchased including a 48” Sub-Zero Refrigerator, & a Thermador Professional series 48” cook-top & double oven (see: http://www.thermador.com/category37.html). The kitchen window has been replaced with a new “Low E-2” Thermo-pane unit. A new center island has been designed, and all new custom cabinets have been built. Installation of the new cabinets will be complete by the end of January 07’. The cabinets will be temporarily covered with plywood countertops allowing the buyers to choose whatever counter top material (granite, marble, tile etc.) that suits their taste. (Note: The old kitchen appliances are included and would be perfect for use in the kitchen of the guest apartment above the new garage.
At this point in the renovation, it would be easy for the home to be finished, complete with all new windows, carpet & paint to the buyer’s specifications within 60 to 90 days. I’m an experienced professional builder with excellent local resources, and will be glad to assist the buyers in completing as little or as much of the renovation work as they may desire. As I have already purchased my new home (on a 3.6 acre lot) and as my new (even bigger) garage is already under construction, I would really like to sell this property, and will therefore entertain any and all REASONABLE offers. This is not a fire sale however, so please do not waste my time or yours with any ridiculous low ball offers. This is a unique property in a fabulous location, and I’m perfectly able & willing to wait for the right buyer to come along. I am also willing to offer short term financing at very attractive terms (with a reasonable down payment of course) in the event that the buyers need time to sell their current home.
NOTE: There is plenty of room in my bottom line price for an investor to purchase this property, complete the renovation and remodeling, and still make a nice profit upon re-selling it. It looks like the Real Estate market is beginning to rebound from the slump it fell into last season, so this could be a very attractive deal indeed for the right investor.
Regardless of which valuation approach one chooses to take, its obvious that homes like this are a rarity to say the least, and that a serious car collector who’s looking for a primary or winter residence in Arizona, should be able to find a way to make this property suit his or her needs. I'm confident that there are enough "car collectors" around this area to insure that this rather unique property will sell fairly quickly.
Thank you for your interest.
Contact Info: Al Trachtman, Tel: 480 488-4676 Cell: 480 390-8757 eMail: firstname.lastname@example.org