Not Sure How I feel about this Multi
Hello all, I want to thank you ahead of time for any input, I think best out loud and this is a good substitute. I recently purchased a package of 4 homes, I planned to sell 2 and keep 2 for rentals. I've sold one, the other is almost ready for sell, I'm thinking about no.3. No.3 is an 1800 s.f. ranch with a detached 2 bay garage with a 650s.f. 2/1 apartment above it. The home is conducive to splitting into a duplex, I've talked with the city already and though I've not filed any paperwork for a zoning switch they said it shouldn't be an issue. If I split the house I'll have 3 units plus 2 garage/storage bays (they are smaller bays so are better suited for turning them into storage units). Here are the #'s, I ran through the BP calculator. I am not taking into account renting the garage bays because I know nothing about renting storage units and not sure if I could get the extra $25-$35/month for each bay.
Purchase: $70k*
Rehab: $100k
Gross Monthly Rent: $2075
Vacancy: 8.33%
CapEx: 5%
Maintenance 5%
Insurance: $100
Taxes: $125
Lawncare: $210 (big yard)
P&I: $649.28
Monthly Cash Flow of $610
CoC 21.54%
The numbers are alright but my issue is the property is located in a C area, not a bad or dangerous area, I own another property less than a mile away, it's just blue collar and there will not be much appreciation. I don't buy for appreciation but I worry about spending this much money in this community, I'm not sure if the property would even appraise for $170k, that's a very expensive property for the area. I look for "free" properties, meaning I want to buy, remodel, and then use the forced appreciation as my down payment instead of my own cash, since I'm trying to grow this will hamper me by taking $34k or more of my money. On the positive side, there could be extra revenue potential in the 2 garage bays and a small storage room off the garage apartment that I haven't accounted for. Also, the house is located in-between a brand-new, very nice apartment complex on one side, a just completed expansion of a nice assisted living facility on the other side and quality brick townhouses behind it. My other options would be to try and rezone it as commercial like the two properties next to it and sell or sell to another investor for $10-$20k profit.
Thoughts?