My First Potential Buy and Hold: Potential Pitfalls?
I think I found a good deal, a 4 unit building, sold as-is, in North Philadelphia and it's listed for $55,000. It has a 3, one bedroom apts and 1, two bedroom apt in it. It doesn't look bad on Google street view.
Rents in the area range from $500-$700 for 1 bedroom and more for a 2 bedroom. I am going to see it today at noon and ask if I can get an inspection to see what the cost of repairs would be. I have a realtor and my wife and I are going to take note of potential repairs that need to be made and try to estimate the costs - I think there's a tool on BP for that from what I've heard. I have a mentor/partner who has a GC to do the work if I need to and I know another GC I trust also so I can get multiple quotes.
I would be ok renting out the 1 bedr. units for $500 and the 2 bedr. one for $700 since the rent alone would more than pay the loan on the home in about two years. I am planning on putting 20% down and financing the rest with my HELOC, which I am transferring those funds to my LLC. I am closing on the HELOC on Tuesday and it is $45,000. That gives me a lot of cushion for potential repairs if needed. I would also be creating an LLC to buy the property.
As a first-time buyer of a rental property, what advice do you have? This is my first real deal (my wife and I each have a home in our own names and rent one on AirBnB and it's paying for the mortgage, utilities, and a little more. Would love to hear back from you all! I appreciate your feedback as a newbie to the game.
Best regards,
Jake