Thoughts on this multi-family property? Looking to buy our first.

6 Replies

My husband and I have decided we want to begin buying multi-family homes. Our goal right now is to find one to owner-occupy while we save up for our next one.

We want the first one to be very easy, cheap, and manageable. We also want it to be close to my parents (my dad is sick) and to have a nice yard and enough bebdrooms for our kids.

We found this one that meets those criteria:

http://www.trulia.com/property/3239871852-114-S-Main-St-Canastota-NY-13032

It's actually way nicer inside than I expected given there are no pictures. (It is an estate.) The house seems solid.

When we looked at it, we thought it was the one, because the upstairs apartment would come close to paying our mortgage, insurance, and taxes.

Then, after some calling around, we discovered the stairs to the upper apartment aren't up to code. We got an estimate to rebuild and it was $15K that we don't want to spend out-of-pocket.

SHOULD WE:

-Look into FHA203Ks to buy the house and fix the stairs?

-If we do that, should we drop our offered price accordingly? What would you offer?

-We probably shouldn't make an offer requiring them to fix the stairs because it's an estate, right?

-Scrap this property and wait for a better one?

Looking forward to hearing your insights. Thanks!

I am a big believer in buying a multi-family for your first rental. If you can live in that great . If the rehab is too much , I think you should ask for the discount. Since it is an estate sale , you are right and should not make them fix anything. I would somehow figure out how to rehab it even if slowly. It sounds like the neighborhood is good so it might be worth the upfront work.

Make a lower offer and if they reject it walk away.

If they accept you move into the upper unit and hold off doing the reno work till you are ready to move out and rent the entire building.

Renting out the larger unit will bring in more income to grow your investments faster. You do not need the larger unit so think profits first.

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Sarah,

If Im not sure if you mentioned if you planned to make a full price offer or not, and how competitive the situation might be? If they won't consider dropping the purchase price by the repair, you could consider putting the $ amount for the repair into your purchase price (increase by the repair amount) and then request that the seller do a repair credit. Sometimes, the seller will accept this and it can be effective. Yes, your down pmt will be a bit higher and yes your monthly pmt will be a bit higher, but it prevents that $15k for the repair from coming out of your pocket.

Note, this might not work if you plan to use FHA, so you'd have to check. It also might not work if it messed with the comps analysis for the lender. But Its worth checking on.

Thanks for your thoughts! Greg S - we have two kids, also. The upper unit would be far too small - but don't think I didn't consider getting them bunk beds and sleeping with my husband on a hide-a-bed in the living room! ;)

Billy - I have a feeling it's not very competitive at this point. I will check into those options. Thank you.

I also just found a listing that sounds promising, a for sale by owner:

$135000/ 7br - 3000ft2-3 unit triplex

3 unit in village. Separate Gas and electric. 3 stall garage. All occupied. Each unit has laundry. Email if interested. Rent income is 2 bedrooms $530, 2 bedroom $675 3 bedroom $550, these rents could be higher long time tenants. Lots of updates. New gas furnaces in each unit.

2- 2 bedrooms (2nd floor)
1-3 bedrooms (1st floor)

This is a good area and a great school district. Has potential!

@Sara Furlong ,

First off...sorry for misspelling your name on the first post!   Looking at this other property's basic numbers, it does seem to have some potential. Definitely worth a further look.  I think you had said you originally that you wanted to house hack (owner-occupy one of the units).  Is there currently an owner-occupied unit, or all they all rented?  If they are rented, you'll want to check the existing lease agreements to see how long the current occupants get to stay in the unit you'd be interested in living in.  Good Luck!  Let us know how it goes.

Thanks for your thoughts. I'm anxiously awaiting the seller's response. I'm not against hanging out in a month-to-month until we can move in, but I'd love to know more details. Hoping it's a good one. Will update.