How to Turn $2M into $3M

By Dave Fratello | October 9th, 2014

In May 2013, a nondescript, very dated brick house at 544 Marine sold for $2.250M.

But it turns out that the buyers did not want the house at all. It was the double-size-plus lot (5885 sq. ft.) that they were after.

Split that lot, and you've got two Sand Section lots at $1.125M each. That's what happened. And it looks pretty good in the rear-view mirror.

Now, a bit more than a year later, those lots are new houses that have found buyers.

548 Marine (5br/5ba, 2800 sq. ft.) was the first to sell.

Built in a beachy "Nantucket" style (per the listing), it's got 4br on the first level – some suites and some sharing baths.

Upstairs it's surprising. There's a big open great room with treetop views over the Tree Section to the north and west.

Very nice views, as it goes, although not the sort of views that you would normally expect to trigger a reverse floorplan like this. It was an edgy choice, but it worked.

The master suite is upstairs in back behind the kitchen – the other surprise.

Sold price in late July: $2.685M.

Then, recently, the builders completed and began showing 544 Marine (5br/5ba, 2900 sq. ft.).

This one has more of a modern/Mediterranean lineage on the outside, but still a bright, and very 21st-century open layout inside. (Meaning no gothic wrought-iron, dark woods or imposing granite.)

It's essentially the same floorplan as 548 Marine, but inside they tricked it out just a bit more, having learned from the questions and comments about the neighbor that had sold first.

544 Marine turns out to have one big advantage over the near-twin neighbor: No neighbor at all to the west, bringing much more light into the downstairs bedrooms. There's a little access road/alley along that western edge, so this light bonus is permanent.

544 Marine has been listed for $2.750M, a bit more than the sale price at 548, and is in escrow now.

So, was this a good gamble for the spec builders?

They laid out $2.250M to start, and now look to sell both houses for about $5.400M.

If we hypothesize that each home was built for around $1M, and deduct other carrying costs and costs of sale, we can guesstimate that the investment has now turned into $3M+, a profit approaching $1M.

It took a year-plus, and there was some risk, and no doubt there were some headaches along the way.

But a lot of us would tolerate such distress for a cool million, right?

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