Wholesaler · Little Rock, AR · Member since 2015 · 10 posts · 2 votes
Hi Everyone,
I am new to the forum. I currently own a 32 Unit apt complex free and clear that I picked up for a steal!
I have had many offers but at this point I am wondering if its better to keep it and rehab myself. The income per month works out to be $14,000 per month (on the low end). I have bids for the rehab at $325,000. I have a local Realtor in place to manage the property and the project if needed. I can either make a quick $100,000 upfront for wholesaling it or make $170,000 per year. The issue is I have never owned a multi unit of this magnitude and don't know where to start. I am not sure even where to get the money to do the rehab. I would consider taking a partner and going 50/50 but again I wouldn't know where to find someone. I just don't want to sell myself short. Owning the property would be ideal for me and my family's future. Please help!
Although far from my area of expertise - once the property has been rehabbed, I presume the taxes will increase significantly from its current $2,600/year?
As previously mentioned, should you proceed with the rehab, make sure it's with a contractor who is seasoned with this scale and type of work, and with the resources to perform it. Regarding those bids of $325K for the rehab, were they provided from the cuff, or in response to a formal narrative Request for Proposal (RFP) outlining the project expectations and requirements? Additionally, did their bids include the architectural, engineering, and other professional fees, along with all of the permitting fees required? These can add up to a pretty penny.
Finally, if you decide to move forward on your own, I strongly encourage you to have a construction consultant on your side of the table to represent and assist you with the A&E and GC selection process and through construction. Relationships go a long way in moving things along, so one who is local and well regarded will be worth their weight in gold.
Although far from my area of expertise - once the property has been rehabbed, I presume the taxes will increase significantly from its current $2,600/year?
As previously mentioned, should you proceed with the rehab, make sure it's with a contractor who is seasoned with this scale and type of work, and with the resources to perform it. Regarding those bids of $325K for the rehab, were they provided from the cuff, or in response to a formal narrative Request for Proposal (RFP) outlining the project expectations and requirements? Additionally, did their bids include the architectural, engineering, and other professional fees, along with all of the permitting fees required? These can add up to a pretty penny.
Finally, if you decide to move forward on your own, I strongly encourage you to have a construction consultant on your side of the table to represent and assist you with the A&E and GC selection process and through construction. Relationships go a long way in moving things along, so one who is local and well regarded will be worth their weight in gold.
Thank you all for the input. The bids we received were not itemized as Michael mentioned. That is a good point. They were in writing and had a basic breakdown but not itemized. We are working with two town officials who have been very helpful in guiding us through the process. We recently listed it with a Realtor and I believe he listed it in the marketplace.
I didn't realize the taxes would go up after the rehab??? Is that common? How do I find out about that? Isn't there a formula for taxes in the county?
The building is in low income area so the type of tenants is always a concern, however all of our rentals are in low income areas and they have been very lucrative for us. There is always a percentage of nonsense but it goes with the territory.
Once the property hit the MLS our the responses increased quite a bit and we received two offers in one day. We are still going back and forth with both people which is why I am trying to do as much research asap before we decide what to do with the offers. I don't want to regret walking away from a good $100k as someone mentioned.
The advice given here has been very helpful and given me much to consider. I have a few investors who I am working with who recently contacted me through one of my ads and they are interested in funding the project. They are asking for a financial statement. I am working on getting that done. It certainly has been a learning experience!
@AJ Hernandez, you'll want to check with the tax assessors office to find out what, if any impact you can expect. As the property value increases (from the rehab), the tax man usually has his hand out asking for more. However, there may be some tax breaks (or grants) the town/city/county/state may have for revitalization.
Thank you Michael. I will certainly start making some phone calls to get this information. It only makes sense that the tax man wants his cut. I only hope that the increase won't be too outrageous.