There's a 4 plex on the market about 20 min from me in my hometown, 4 2bd/1 bath units, haven't seen the inside yet but there are 3 long term renters and current rents are $275, $350, $350, and $400, I'd like to increase rents to $400 each unit, price is $47,900 but can probably get for $40k and seller is willing to carry note as well, taxes are 2k a year, homeowners is 700 a year, what do you think so far?
Sounds like a steal depending on what the seller terms are and how soon you can being making a profit .
You will gross 19,200 a year minus the debt service. Im sure the seller is looking for a nice down payment.
I would definitely consider an inspection and maybe you can find some more barganing points.
@Dean Klein - Why is the seller letting it go for so cheap? Based on CAP rate he should be asking a lot more. Also - he is offering seller financing?
Those are two red flags. Im not saying that it's a bad deal, but I would proceed with caution.
It's located in a town of 300 people. Its been on the market for 4 months too so as long as I get a good inspection, and theres nothing major, I should proceed. I can put down at least half.
what is the market for keeping it rented with a town of 300 people? Dig into his past rent roll for several years. What is the economy of the town? going up or down? who rents the apartments?
I checked out the property yesterday, all apartments are rented with 1 long term tenant that has been there for 10+ years but is paying the least amount of rent. The others are fairly new. The building was built in 1897 but the apartments look great, will have it inspected though. The tenants are all on month - month but I don't believe there are any leases in place, I will be keeping them on month to month but having them sign rental agreements. I talked to 2 of the current tenants after the agent left and they want to stay, seemed like good tenants, one guy was actually leaving to pay rent. After looking at this place, I want it bad, I am putting my offer in today.
There is great income there. It's just the inspection with a house that old. What s going on with the electrical? Does it have to be upgraded ?and the plumbing? and the roof? and the furnace? And the Foundation? Any Kitchen or Bath renovations necessary? What are your total rehab costs? Can you handle some high renovation costs and what would be your cut off number and where would the money come from if you have to renovate
The owner is an 84 year old woman who wants to sell so its not a burden on her anymore. The furnace is newer, roof not sure, the electrical is updated and plumbing also. I have 25k that I would be able to spend on reno if needed.
nice find, Dean. Numbers REALLY look good, however...when it seems too good to be true....you know how that ends. I would look deep at the demographics as Sarah mentioned. Make sure you will have little to no vacancy long term. Also, roof, electrical updates, HVAC, other systems that may need updating could be add up.
This one sounds solid. Let us know how it turns out.
@Dean Klein , there are several comments on here encouraging you to be cautious, because it sounds too good to be true. And that's really good advice.
On the other hand, it's $40K. Until you actually get into owning a property like that, you don't know what you don't know. Learning experiences don't come much cheaper than that.
Don't let caution make you talk yourself out of an opportunity.
@Dean Klein : Hello. Did you end up buying the 4-plex? If so, how's it going thus far?
I put an offer in and another offer conveniently came in and I was beat out. I'm now exploring flips to build capital.
Damn I was really hoping this would turn out well in your favor, I was excited to learn from it.
- hard costs
balance tells me mortgage payment
put that into mortgage calculator at 6.5%, 20 yr amort.
thats max offer, fixed.
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