BiggerPockets

As usual I will post my deal that I am working on.

I am purchasing a house in a below average neighborhood. It will be a 10,000.00 dollar sale cash. The total will cost me 10410.00 with closing cost. They already have an established renter. He is blind and deaf. He gets a check from the government for disability. He is paying 325.00 rent. It seems to be a good deal. I will get my return on investment in about 4 years.

The second deal I am working on is a house that has 5 bedrooms and 4 bathrooms. I will convert it into 4 apartments. From the start I will setup 3 apartments at the bottom and then as time goes I will add another on the second floor.

I believe I can get 350.00 a unit per month.

I put a bid for 25000 and they took it. I will go through a bank and have to put 5000 down. I have closing cost and insurance and inspections to do. I will keep everyone posted of fees and outcome.

I believe it should bring income of 350 x 3 = 1050.00. The expenses will be a about 600.00 with a cashflow of 400. I think it will be a good deal considering I will still have another apartment to add in the next 3-6 months.

I agree.

Make sure your due diligence is thorough.

Is the property zoned for multi-family?

If not, what's involved?

How much will it cost to install individual utility meters for electric, gas and plumbing?

You can do well on this project if you can handle these conversion expenses.

If you're not ready, this thing might not cash flow. Good luck.

Regarding the "established" renter... make sure that you are covered regarding any special needs this tenant may have and the previous owner either ignored or handled via a verbal agreement.

You could get stuck with a lot of ADA issues and not even be aware of it... better to find out prior to purchase.

Good Luck!

Sorry Travis,
but the second deal you mention is not a deal to me. Did you consider your Cash Renturn on Investment? basically that number is derived from the remaining cash you will have after you pay all your expenses and mortgage debt divided by the amount you put in. you said it cashflow 400 but what about your mortgage too? once you start boiling it down you will see that your Cash ROI is in the low decimal numbers we are talking between 10% to 4% on your money, that actually is the same rate you can get for some bonds on the market that are rated triple A. I would actually just do the cosmetic cleanup and rent the house out.

To many expenses for such a little return.