I have been tinkering with my real estate data analysis machine lately so now we have the ability to look at all of the sales of condos in a condo building. This is a nice addition to our analysis toolbox. First we establish a list of desired characteristics (age, location, number of units...) and use it to create a map of buildings, then we drill into the building and look at each of the sales.
We can create a map of 243 condo buildings built before 1980 with between 20 and 40 units:
We are quite taken with Alki in West Seattle, so we can drill into that area:
And then we can find the ugliest one (not super scientific...) but I think you will agree!
And now we can evaluate each of the sales back to 1996. The building was built in 1966, but we can only get the data back to 1996. Strangely, the data availability seems to vary quite a bit building by building. Unfortunately, we do not quite have enough data on this building to calculate a historical average hold period. We could apply our research from the overall market for 1 bedroom units of approximately 8 years. From this we see that 13 of the 22 units have exceeded the average hold period.
Remembering our guiding criteria of ugly + view + walk to the bar, this property is pretty good. The picture speaks for itself, and it is located on the point at Alki with a full sound view and if you look to the right, a view of the city. It is a 12 minute walk to the passenger ferry to Seattle, a 17 minute walk to Salty's, and a 28 minute walk to the Nook. Thank goodness someone invented Uber, because this place looks great, but I am not sure I want to walk 28 minutes up that hill.
As we look at these buildings, more criteria is emerging. Here is a list of things we may want to consider:
- Parking: A good, secure and navigable parking garage.
- Unit Size: This building is 640 square foot, 1 bedroom units. (the last one was 1,200 square foot 2 bedroom units)
- Number of Units: This building has 22 units -- smaller buildings will be easier to take over, but will not support as many amenities.
In the end, I am thinking this building is ugly enough, but the units are too small and there may not be enough of them.
We will keep pointing our new analysis machine at these buildings and see what we can learn -- and continue to wait for that market correction.
Feel free to leave your comments!