i dont think this is a deal...can anyone see a deal?

Question

wilkes barre pa.  nice, blue collar area.

8 unit building.  6 units are 1/1, 2 are 2/1

4 are ready to go.  1 minor fix, 2 moderate fix. all cosmetic

1 down to bare walls.

electric heat,

plumbing completely removed from basement. upstairs ok

6 meters/boxes.  electric shared somewhere

rents plus or minus 600 when done.

needs about 1/3 of windows. rest new.
roof new.  some minor water damage in 1 unit.

est 30 to 50k to finish. including electric split

owner firm at 65.  im thinking 25 to 40.

am i off base?

thanks

Savannah Leigh · Answer

@Sam w

what formula gets 240?

Savannah Leigh · Answer

3 Would begreat

3 was what iI paid to replace an existing oil w gas...with the baseboards in place.  Maybe if iI shop..

David Krulac · Answer

here the gas co. had been doing the line from the street to the bldg for free, now they charge a slight fee.  We've done the whole heat job for about $3k per unit.

Savannah Leigh · Answer

true.  there is gas here. could convert....but look at another maybe 50 grand or morein costs

my furnace/system installs average 6 to 8k per unit.

but alot of these tenants like electric because ppl is more flexible with payment plans

but...one more reason that its a deal i want to wholesale or pass on

David Krulac · Answer

Savannah Leigh

I'm about 100 miles away.  I have been aggressive in getting rid of oil heated building by either selling or converting.  My first choice is natural gas, cheap and plentiful.  They put a gas transmission line thru one of my properties and the gas people were telling me that just in PA there is a 100 year supply of natural gas.  the price has dropped so much that some wells have been capped.

I don'y like electric baseboard heat in old buildings that are not energy efficient, tenants will leave over high heat bills.

Savannah Leigh · Answer

30 Is leaving electric as is and offering a few all included and some separate utils

50 is split everything butwater

zoning is ok

500 is safer

David Krulac · Answer

Savannah Leigh

Besides questioning the $600 rent, I'm more comfortable with $500.  I also don't like electric baseboard heat in an old uninsulated building.  Yes, the tenants will pay the heat, but they will not stay to the second winter.

Also I question the $30k to $50 range for rehab.  Too big a range, sounds like a top of the head number not a real number.  Before I'd go forward I'd get real contractor numbers for the rehab, you could be unpleasantly surprised.

Also I'd check with zoning for violations, rental inspection, and whether 8 units are legal.  Recently saw a 6 unit that was a legal 4 unit, really drastically affects the numbers when the town tells you that 1/3 of the building must be perpetually vacant!

Savannah Leigh · Answer

Can someone walk me through the math?  I'd love to wholesale this...or partner with someone.

I am ok w the 600 rents, my partner's number.  I am more in the 500 average range.

3000k/mo gross fast.  4000 once the last 2 go online.

yes down to bare plaster, not quite studs

Yes 2 contractors.  We all (3 of us) put it in same way.

Anyone want to buy this from me wholesale?
taxes 3600, insurance 2k, water 350, 
50 per unit is sewer quarterly ballpark.

I do 30% maitenance and vacancy
10% mgmt
100/mo/unit profit and let the balance tell me my mortgage max, which is max offer

Comps (not many multis nearby) are 150 ish.  For me (electric heat, unknowns on electric and water, one water meter) I would say 120 tops value...2 local investors agree

David Beard · Answer

You sure about those rent comps, $600 for a 1BR with tenant-paid electric heat, in a blue-collar area?  Is that baseboard heat?

Do you mean that one unit is down to the studs?

Did you get a contractor to view it (plus electrician and plumber), or do you have solid rehabbing experience to come up with your numbers?  You really don't know the state of the plumbing until reconnected.  The electric issue, additional service panels, figuring out what goes where, and running wire, can be an expensive headache.

New roof and lots of new windows sounds good.

Are there similar properties in the area you've been able to get unit sales comps for?

Patrick L. · Answer

Given that information I'd be interested at 65k if it were in my area.  Are all of the units legal?  With 8 units and 6 meters I'm wondering if there were a couple added later without permits?