My husband and I are trying to begin real estate investing. We would eventually like to have several of our own properties to rent out. We recently went for the inspection on our potential property this past Monday. The 3 bedroom house went as expected with no huge concerns.The only one being that there are several vertical cracks in the foundation in the basement that could be an issue. However, the one bedroom apartment found to have significant termite damage (possibly 10 years worth) and is need of a new roof. The expected costs could be up to 20,000 in repairs. The whole exterior needs to be torn down and redone. The seller is willing to negotiate and I believe will be doing the repairs but we haven’t gotten confirmation yet on that. Should we even consider this as an option or should we back out now? The one bedroom apartment rents for $700 currently and can easily rent to $800. The house rents for $1300 and could go up to $1500 once cosmetic renovations are done. The garage portion of the one bedroom could eventually be converted into a studio and be rented for $500 or so. If this goes though we settled on 192000 with 3 percentage seller help. This was before the inspection or repairs. Just looking for an investors perspective and could use somebody advice.
@Angela Schoenborn Is it legally permitted to be a multi. What is the zoning? Legal to convert garage into studio? Financing? Owner occupied? Taxes?Insurance? Have you run it through an investment calculator? Taken consideration of repairs,vacancy,capex? City water and sewer? Too little detail to give you any advice. Learn to use an investment calculator. BP has one you can use 5 times unless you turn pro or download a spreadsheet from the files section.
What part of the country are these properties in? Here in the southeast USA, termite damage is very common. Most of the homes we own have "some". The chemicals used nowadays to prevent termites have a pretty short life compared to what was available 100 years ago. Thus regular re-treatment is necessary to keep them at bay.
As far as the damage, not sure why the walls would have to be torn off unless it's a really severe case. I am currently (as in today) working on a property that had extensive termite damage and it is a major issue that required extensive structural repair and one section of the house had to be completely rebuilt. (As in taken down to the dirt and start over) I have one other property that has major damage as well but most of the time it's situations where the termites eat the trim boards or paper on the drywall under the paint. So definitely make sure to further define what has to be done. If the structural damage is severe, you may want to not buy this property. If the repairs are reasonable, I wouldn't be afraid to move forward. Termites are very selective eaters and will completely destroy some woods and not touch others. Thus the damage can be scattered around and not all in one area.