Advice on run-down 11-unit multifamily in affluent area
Hi everyone.
I am new to the forum but I've been putting in a lot of time going through the posts and learning as much as I can about real estate investing.
Ive been looking at a property close to where I live here in Victoria. Its a bit of a unique case, and being that I'm new to this I'd really like the opinion from some more experienced investors.
The property is located in a high-end part of town, in a heritage residential area about 3 blocks from the edge of the downtown core. Other houses around it are immaculate and of the same era, a very affluent community. This house is larger than most and is frankly an eye-sore. Overgrown garden, broken down cars in the driveway, garbage bags being used as window-blinds.
It is listed on mls for $750,000. The average single-family home price in Victoria was $700,000 in 2014.
Built in 1910, the house is 5500 square feet, a grand old mansion that has been converted into 10 units. The units are tiny, many of them sharing a bathroom. The tenants are all very low income but being that there are 10 units in the house, and a detached carriage house means the property nets $6100/month.
A building inspector from the city looked at the property and mandated that basement suites, two one-bedroom units, be divided by a firewall and had their ceilings fireproofed as well. I would, over time, update the suites and repair the building to restore is former glory.
I am a recent grad with an urban planning degree, but that means Im lacking the capital for a down large downpayment and therefor creative financing is my only option, and the owner has agreed to $100,000 in vendor financing which would have to be met with a traditional mortgage and secondary private funding.
I would really like some experienced opinions on whether or not this would be a worthwhile undertaking. I realize going into such a large property without a substantial downpayment is risky, but I think the property has a ton of potential and I read somewhere that history favours the bold.
Thanks very much BP, this community is incredible.