Investment opportunity, need experienced advice
Hello all, fairly new to Bigger Pockets and real-estate investing. We purchased our first rental home (single family) and it was a seamless transaction that immediately rented at near 1% and required minimal turnover. In short, we were spoiled. We really want to pursue this as our path to financial freedom.
Recently we came across a grouping of 3 homes. 1 single family home (4/4) recently renovated, and 2 other homes that appear to be single family but are metered for 2 units (6/4 and a 3/1 metered for 3). Package price is ~825k.
I know it's a lot to ask but would love to get the gestalt of any of you who are experienced on what you think of the deal and how we plan on purchasing if we do.
We would purchase using a business line of credit variable on prime rate (5.5% currently) and immediately refinance into 3 mortgages. If we can do 75% of purchase price, rate is ~4.875%, if we do 80% refinance, rate is 5.1%. We would be responsible for the remaining amount at that variable prime rate.
The Qpublic appraisal for each is 236K, 298K, and 230K respectively (total is 764K based on appraisal value). Monthly rental rates are currently 2000, 2355, and 2025 respectively. Fairly close to 1% rule at appraised rate, but seller will not go lower than $825K.
It is a very desirable and up and coming area, so I suspect all homes will hold their value if not grow in equity well, and also likely stay rented. As they are semi-multi family but in a great area, the tenants tend to be B or higher. The homes could probably be flipped (all are in good condition) back into single family homes and potentially sold in a few years with good growth.
Do ya'll think this is too big a bite to take on right off the bat?
Do ya'll think those numbers are worth it and doing so with a business line of credit? Over the next year we would probably build enough cash to pay off the remaining credit on the variable loan, and would subsequently be on traditional mortgages for 4.875 - 5.1%.
I am happy to try and provide any other info that would allow you guys to weigh in.
Thanks so much in advance for this newbie question!