When a Real Estate Investment Requires Demolition

If you have purchased real estate, or are considering making the investment, but the property needs to be leveled, there are several factors to take into account and discuss with a lawyer, like an appellate lawyer in Los Angeles, CA from Timothy Kassouni law firm. The answers you come up with, and the relevant information you gleam, may tip the scale in your favor and help you to protect your investment and profit. If you have determined that demolition is necessary, hiring a professional demolition company is usually the wisest choice. Their training and specialized equipment can get the job done faster than having your employees do it, plus it limits your company’s liability. A demolition company that is licensed, insured, and has a positive reputation in the area can accelerate the process and get you to the next phase of your development plan that much sooner.

Consider Possible Tax Deductions and Penalties

Real estate tax laws can be confusing, and they are subject to change. State, local, and federal laws, building codes, and tax requirements may seem at times to conflict with one another, which can make investment decisions difficult. A real estate investment professional with a background in tax laws can provide invaluable advice to you prior to purchasing real estate or making the decision to demolish a property for future development.

Consider the Demolition Costs

Before purchasing a real estate property, determine if it is acceptable for occupation as is, if it can and should be rehabilitated, or if it will need to be demolished. The costs for demolition of a building depending on a number of factors including:

·         The size of the building, including square footage and number of floors.

·         If the building contains hazardous material such as asbestos.

·         The proximity of nearby buildings. If they are very close, the safety and technical considerations are more extensive than when a building is isolated.

·         Whether or not the entire building will be leveled, or if it will only be a portion of the building.

·         If the debris must be removed or can be reused on sight, negating the need to ship it to another location.

Consider the Costs, Risks, and Anticipated Return on Investment

If you have done your due diligence and researched all of the above information as it pertains to a particular property, you are in an excellent position to determine if it is a worthwhile investment. If you have already purchased the property, you can decide if you want to keep it in your portfolio or sell it. If you keep it, you can better determine if you wish to demolish the existing structures and keep the lot empty, build to suit a renter or buyer, or build to attract a wide range of renters. Though market values can fluctuate in sync with the local economy, some types of real estate are more consistent in their valuation. Another factor that may influence your investment decisions is whether you are looking a short term return, or a long term return on your purchase.