Insane to take this on as my first deal??
Hey BP,
Newbie investor here, considering placing an offer on my first property....but am worried about taking on too much for my first deal. Would love some advice from experienced investors! Apologies in advance for the lengthy post.
The property is a tri-plex in a small, lesser known town outside of the SF Bay Area. It consists of a side-by-side duplex and a separate unit behind it that is what the selling agent describes as a “shell”. We did a walk-through with a contractor who helped us determine the SOW. Total reno (between both buildings) is 200k. We are planning on using a 203k loan to finance the property and renovation.
My big hold-up on placing an offer is how huge the renovation would be. The front house needs big ticket items done - there aren’t even any interior walls (roof, windows, a little foundational work, update electrical, carpets) but is in “good” condition otherwise. The back house needs everything: from insulation to interior walls, flooring electrical, plumbing, kitchen, bathroom etc. The contractor (whom has great references and works with investors in the area and is an investor himself) said that the house has great bones and structure. I also feel like I should say that this contractor is booked, so unable to do the work, and came out just for the walk through and I felt he didn’t have any motive to be diss honest - he actually ended up not even charging us for the 2 hours he spent there.
Other than that, it works as a cash flowing property with decent returns. We have done our due diligence and have been listening to podcasts and studying/analyzing properties for 3 years, so we feel as if we are as ready as we can be without the hands-on experience. It’s HARD (impossible?) to find house hacking deals as a newbie around our area without having a 3 hour commute into the bay, which is why we are actually considering taking this on!
Thoughts/advice? Terrible idea?
Thanks in advance!