Hey BP community I'm new to REI how i have 2 choices to pick to start investing
1.) A 3 unit with all 3 units occupied.
2.) A 4 unit with no tenants but need about $10,000.00+ worth of work done to it.
Need some more details. What is your end game, buy and hold, flip, etc.
I want to do buy and hold.
@Lionel Miller in order to get a true analysis of your situation, you will need to provide more details. Purchasing price, financing, rents, taxes, insurance, etc.
@Lionel Miller if tenant versus no tenant is your main determining factor, I would say it shouldn't be. Some times the tenants in place are not ones you would want to be in place. If they do go with one that has tenants, I would ask to see the rent history of the tenants and their initial application.
Here are a few questions that can help you decide:
1. Asking Price compared to Market Value.
2. Recent Comparable multi units sold in that market. Look at the county assessor’s value on property and compare it with others that sold.Did the ones that sell come close to the assessor’s value?
3. What is currently for sale?
4. On the 3 unit, what is the current rents? What is the surrounding market rents? Is it close? If possible, can you raise rents 10 to 15% a year while improving quality of life for tenants to bring it up to market?
5. On the 4 unit, what is the current market rents for comparable size unit? How soon can you get a tenant in after rehab?
6. Will you be using a Property Management Company?
7. What are the total required expenses for both properties?Take the rents and minus the required expenses (trash, water, sewer, community electric, taxes, insurance… (Don’t include your mortgage, if you will have one).
8. What is your short and long term investment goals?
9. What specific timeframe are you expecting to hold this for?
10. Do you have at least two exit strategies if something crazy happens to get out of the property or turn it around?
11. Do you have six months of expenses put aside?
These are a few things you can ask yourself to ensure you have a plan.It is better to have a plan when you don’t need it than not have a plan when you do need it.
@Lionel Miller - not a lot to go on here, but I would choose the vacant one just because I don't like to inherit tenants.
For a better understanding of the factors to consider in you initial analysis, take a look at my blog post from last week: http://www.biggerpockets.com/blogs/6815/blog_posts...
Hope that helps!
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