Have I Lost My Mind?!?!?!?
I’ve analyzed the hell out of properties, all over the country, in my backyard, a neighboring state, places where thearea is listed as one of the fastest growing populations in the country, and numerous others. Some might say I’m suffering from paralysis by analysis. I may be a bit, I know I should dig in with both feet and buy something, just lacking a little confidence in using these tools right. I am rather ambitious, wanting to get into this thing called real estate investing running on both feet, not tripping, stumbling, and crawling to the bank.
I've located a multiple SFH portfolio in a solid area for rentals. One owner passed away and his wife wants out. I've been talking with the agent, and I am really interested in buying the whole portfolio. The properties number in the teens.
The agent tells me about half of them are in good shape with recent updates, but the other slightly more than half needs TLC, and she made it seem like a lot of TLC. She mentioned a couple roofs. But she also said all the properties rent as they are. Right now they are all renting below market with long-time tenants. She mentioned after said TLC that I could raise rents $150-$200 a month, of course, I would be very likely to lose my potential current tenants.
Some of my concerns include the fact that these properties were all bought back in the 90’s. My thought is that the owners have just been milking these places for all they could and letting Rome crumble around them. I would love to solve this woman’s problem and take the entire portfolio off her hands in one deal. I’ve run numbers after numbers, playing around with money down, finance rates, rents, reserves, etc. I feel like I have come to a number I am comfortable with, without even seeing the properties, other than through pictures, but I only have outside pictures in hand. I’ll be calling the real estate agent back tomorrow to discuss my thoughts. Do I ask this agent for enough time to tell me about all properties individually (remember, the number of properties is in the teens)? Do I get her to video a walkthrough of all of them? I’m nearly 1,000 miles from where these are located. I can’t get there to see them myself. How do you out-of-state guys do it?
These properties are scattered through small towns about an hour from a major city. The agent offered to manage them for me for a price of course, which is fine, I’ve baked that in. She also mentioned a need for a handyman, again, baked in and obvious. Tips on finding a handyman in a small, small town would be appreciated.
I'm thinking of going in with an offer at about 65% of retail, no higher than 70%, after I've seen the inside somehow. That would give me the CF and the COC ROI I'm looking for. I'm hopeful old momma bear really wants to just get rid of these things and take it. Am I trying to bite off too much at the start? Am I too aggressive? Have I lost my mind? Given the words of the agent, going with your gut feel would I be offering too high?
Answer what you will. I appreciate all feedback.