Sketchy Deal and Agent but Numbers Work

[Zachary Bayles]

I have a potential off market deal in my local market but there are a few things that seem off and I just need a little advice.

Market: Norwalk, CT (hot market right now!)

Price: 470k

Building: Duplex with a big detached garage in the back that was converted into a large studio. Agent marketed it to me as a triplex.

Situation:

A few months ago, a broker approached my partner and I about an off market deal. Apparently, a group of investors were splitting up and wanted to sell off their investments (this is coming from the broker so not sure how true it was).

•We ran the numbers and it Cash flowed between $600-800/ month with all the units rented.

•Broker told us that they had a buyer, but their financing was falling through, so we should get pre-approved to put in an offer.

•We got pre-approved, told him we are good to go. He told us he would let us know when the buyers financing officially fell through, but then just completely ghosted us. We figured the buyers worked it out or he went with someone else.

Fast forward a few months – He calls me and says: hey it looks like it’s going to be available again.

•He said it’s zoned for a duplex though.

•I asked him what it would take to make the studio in the back an official dwelling unit and he didn’t have an answer for me, just emphasized the rental income I could get for it.

Numbers still look good but I’d rather not do anything illegal and I would want to go about it the honest way. I asked him why he didn’t just put it on the market and he said if I don’t go for it then he most likely will.

Any advice on how I should approach this and if anyone knows the process of turning a garage into a legal unit would be much appreciated.

Thank you! 

[Jaysen Medhurst]

Lots of sketch in this game, @Zachary Bayles. If this is a legal duplex, you offer like it's a duplex. Maybe the garage unit can be made into a legal unit, but it's not legal now. There could be a lot that goes into making it legal. Not least of which, is it zoned for a triplex? Turning a garage into an apartment takes a lot more than just slapping up some drywall. I would be shocked if it met code.

Secondly, I'd be shocked if any small MFR in Norwalk can actually cash flow $200-265/unit/month.

Caveat emptor, Zach.