Is this worth the investment?
I've started analyzing deals for practice and wanted to see everyone's opinion about this deal. Only one of the 8 houses has been remodeled and leased out, the other 7 houses need a lot of work. Would this be a good BRRR investment?
Description:
This 8 home package for sale on Hadley Street is the Perfect Investment for You! Each property features 2 bed/1 baths. The first property 3523 Hadley St is completely remodeled and leased. This super cute house has new roof, new plumbing, electrical system, interior/exterior painted, double pane windows, ceiling fans throughout, new doors, new kitchen cabinets, new light fixtures, wood floors, granite kitchen countertops, new stove, exhaust and back splash. Good size yard, with Iron Gate and parking area. The remaining 7 houses are just waiting for you, so if you have Construction skills and what it takes to remodel them go for it!
Place: https://www.realtor.com/reales...
#4 Multi-Family and Apartment Investing Contributor
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- Shelton, WA
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#4 Multi-Family and Apartment Investing Contributor
- Investor
- Shelton, WA
It has been on the market basically since August 2021. So 500 days? During that time no investor has snapped it up. There are no economies of scale here......this is eight little houses.
The first one that has been fixed up sounds great are you prepared to do that 7 more times? And at what price. Yes there is some positive cash flow but also serious expenses. I am not familiar with Houston market. Look around at other opportunities you do not have to worry about someone snapping up this one in a hurry.
No management fees? You're going to be managing eight properties by yourself?
Management fees usually come in around 8%, which should equate to around ~$650. Your property will negatively cash flow.
FYI, if @Bjorn Ahlblad mentioned if it's been on the market for 500 days, that sounds like a ripe opportunity to lowball HARD.
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@Bert Chen in your analysis you are assuming that loan will be 845K (100%). which lender is giving you 100% loan? Also, 6% interest rate is very low. Remember you will going for commercial loan which will be higher than conventional loan.
@Bjorn Ahlblad and @Alex Larcheveque have provided you good feedback which I totally agree.
Unless you are partnering with an experienced investor, I would pass on this deal. Taking on 8 properties at one time is a tall order even for an experienced investor, plus the numbers don't look great. Pass.
I looked at that property since I had a LOT of property very very close by (almost 3 blocks of land + a church + a community center). If I was going to keep my property in the area I'd have bought it just as a land play.
The area is rough, but improving. It's a nice little property but you have to have stuff near by to make it worth it -- and you need a better price (rates have gone up / market has gone down / they're asking the same price that they couldn't get when the market was hot)
Hi everyone, I appreciate all the feedback! I've learned a lot and will use all the great pointers when analyzing for more properties.