I recently contracted a small duplex in the Huntington Park area of Los Angeles. Ask was 505k - however, being the only duplex in the area it was very difficult to find accurate comps. The surrounding homes are well into the 6's, but the duplex has had little restoration and is currently occupied by handicapped month to month renters. With a 6% cap rate it isn't a terrible cash flow play -- and there's a potential appreciation ride. However, ideally it'd be a fix and flip where the right investor could convert into a larger SFR or just renovate the existing units -- BUT I have a tough time pitching local investors to give notice to handicapped tenants whom the duplex has been physically adjusted for. Sometimes the most lucrative play just isn't the right way to do it.
Anyone have experience with anything similar?
Would you even be able to get rid of the tenants if you wanted to? To you have any indication they would take a buyout?
Actually just this afternoon, after a few talks with them we agreed to a cash for keys scenario. So a buyout was what it took. Good call.
In the end, even though $ is coming out of my end, it will be a better play for the eventual investor to come in and fix n’ flip so it’s up to local comps. Win-win
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing