I will be closing on a 5 unit in the next couple weeks. I have been waiting a year for this due to the owner being overseas. Cost of the building was 73k. There is private financing for this at 52k for 5 year balloon at 6.5%. Also there are back taxes. They have now climbed to 16k. so currently the owner will owe me money to take the building. The private mortgage holder is currently holding the mortgage for the current owner and wants to foreclose if this doesn't close in 2 weeks(will transfer to me when I close). the city have threatened to take possession of the property if a payment plan is not reached in 6 months. Rents are currently $2500 a month when fully occupied. I believe I could gross close 3k once things are updated. one unit is vacant. I will have to put close to 10k worth of work into this property to get the apartment rented and up to code with the city. The value of the building will be close to 110k-125k once work is completed. I currently own other rentals in the area and know costs of rents. you can get a decent 2 family house in my area and generate close to 2k in rent for 45k. so my question is should I buy or sell this. I will actually generate more money on the 2 unit due to insurance, taxes, rental registry, and heating/lights for one apartment/common areas.
mortgage 52k ballon @6.5% 5 years about $650 a month
work needed $10k
rent $2500 (may be able to increase to $3000 after repairs) $30000 a year
Water $1000 for year
heating/lighting $2500 a year
insurance $1200 a year
repairs for basic maintenance $2000 (estimate)
It appears to be a very good deal to hold however I would never invest in a multi that is not fully seperatly metered. For me tenants must be responsible for all their own utilities regardless of how good the deal is. Plenty of fish in the sea..
I would consider flipping it for a quick profit and move on.