Looking for outside advice here. I️ think my emotions are getting the best of me and I️ would value some words of wisdom.
I’m under contract for a 5 unit multifamily in my home town. 4000 sq ft, 1 bed/bath units with covered parking for 4 and an enclosed garage for #5.
Monthly rent is $2,550
Purchase price 225,000
Initial contract was as is but we negotiated to add an inspection contingency. The inspection found minor issues with the exception of the roof. The inspector recommended a roofing contractor to evaluate based on obvious damage.
Roofing contractor said it needs full replacement at $6,000 but could get by with $300 repair.
We passed this info on to the buyer. Buyer refuses to pay any additional money at all. Buyer is willing to replace shingles on his own but will not pay our roofer to do it.
I’m mad in principle but the 300 isn’t a big deal. The eventual 6,000 is a bigger deal.
I️ can still walk away but should I️ just suck it up and have roof replaced when I️ buy?
That would bring cost to 231,000 for potential 2,550/month. Tenant pays all expenses. Tax about 1800 and insurance 2500 per year.
@Chris L. Go with your gut. Always trust your gut. You already know what to do. Do it and don't look back.
If the deal is good enough now for $300 and later at $6000 do the deal. If you feel otherwise, you know the answer.
No wrong answer here, but 2nd guessing will drive you crazy. Best of luck to you!
add 6k to year 2 as an expense, and run your numbers... BUT I would do about $1000 in repairs and triple checks now... a roof failure causes $$$ other damage... not the same as an HVAC being on its last legs.
I would factor in the $6,000 into the cost of the purchase price when you continue to analyze the property.
Also - $300 to "repair" the roof seems like an awfully low amount...considering the company needs to pay for labor and supplies...are they just puting scotch tape over the roof?
Personally - I would go ahead and spend the $6000 over the $300. Tenants know when their landlords go the scotch tape fix up route over a full fix up.
I would ignore the fact that the seller won't pay anything. That was basically your deal up front -take it or leave it.
All comes down to your analysis for a $6K repair - or assume there will be some rotted wood, etc and call it an $8K repair. If it's still a good deal, go for it.
If it's just some shingles for now, $300 seems reasonable as a short-term fix.
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