Garfield NJ - 12bdrm Quadplex - 1st Home purchase - biting more than we can chew?
So we have a 4 family Citibank REO under contract. It is two detached duplexes(upstairs/downstairs units) on one 5000sqft lot. Each of the 4 units, are 3 bedroom and 1 bath. It is not in a floodzone, two blocks from a nice park, two blocks from a bustop that takes you into the city in 38 minutes. Less than 1 mile away from a train station. It is in a really nice part of Garfield and is the ugly house on a block.
Above Picture, is for the Rear House
Above Picture, is for Front House. Bottom Right (1S) building is what was an illegal 5th studio unit, now considered a bonus room.
This will be my Wife and my first Real Estate Purchase, we have been living at home just saving money. When we first saw the property we were very excited because it was the first property that seemed to easily meet our goal in finding a property that when fully occupied would give $1000/month cashflow.
- PurchasePrice: $480,000
- Taxes: $10,700
- Rent: $1500/unit
After our downpayment we have about $45,000 leftover, we were hoping to spend $25,000 in beautifying the property. However we just had a home inspection and there were some things that were found that we weren't expecting that need to be addressed:
- Main Waterline into the house is Lead Pipe
- Asbestos Insulation on some pipes in basement
- Possible puddles in basement maybe due to water seepage, although I think it was due to dripping hot water heater
- Small leak in main sewer pipe
- We had an oil tank scan done; appears there is a decommisioned tank in the ground; the bank said they would take care of excavation prior to closing
- There is a illegal 5th unit; now considered a bonus room - it also has a seperate basement. There is significant water damage in the basement, and the subfloor has been reinforced but the old original wood has a lot of mold on it. We are thinking of either putting a new floor in it or knocking it down and making more room for parking.
- Some Cracks on outside Masonry
- Some signs of termites
- Missing Flashing around house
Anyway after the home inspection, we were both really down - it seems like there is just so much to deal with... there is tremendous income potential with the property, but being new investors I don't know if we can handle some of these major issues. We were hoping to save some money so that we could seperate the heating, currently there are a total of three gas meters, wanted to install a 4th and install furnace/hotwater-heater/reroute plumbing to seperate the heat. Currently one unit shared in each house. Any advice out there or thoughts; especially interested in what other North New Jersey investors have to say.
Here are some more pictures of the property; Inside is a little outdated but in decent shape: