Multi-Family Triplex in Elyria, OH looking to gauge interest

[Bill Pate]

Hi,

I am looking at a Triplex in Elyria, Ohio. The house has been vacant for a while, and is in need of some major repairs. The house has been condemned, but I am working with the building department to find out what would be needed to bring it up to code. I own a duplex literally right around the corner, so I know how much the rent from each unit will bring. I don't know all the details about the house just yet. It looks to be possibly (1) 2 bedroom unit, and (2) 1 bedroom units. After working with the building department I believe I might be able to get the city to deed me the house for $1 if I agree to bring it up to code. Not sure what kind of time frame is involved. My first estimates are to bring the house up to code would cost approximately $35-40k. After all renovations the house would probably bring $1400 a month in gross rent receipts at the least and $1600 at the most. Personally I would buy the property and see to all the renovations. I wanted to gauge interest in taking a partner to share in the ownership, renovation costs, and monthly rent profits. I would manage the property myself and all three units would be rented meaning I would not occupy one of the units myself. I have owned a property management company for the last 10 years and have my process for finding good renters down pat. Basically my plan was to fix any issues on the outside of the house first such as windows, roof, gutters, etc. Then to renovate one unit at a time starting with the two bedroom. Once the two bedroom is completed rent it out and start on the other units. I am only willing to take on one partner on this deal and we would split all costs and profits down the middle. The property taxes are $1225 a year and most likely we would have to pay water, sewer, and trash which would be $240 a month most likely(my duplex is $160). Each unit has it's own electric meter. A dwelling policy for the house would not be more than $800 a year. So property taxes would be $102, W/S/T would be $240, and insurance would be $70, then figure ten percent for maintenance and vacancy which comes to $140 a month. Expenses would be no more than $550 a month so NOI would be right around $900 a month. This leaves about $450 per month per partner on a $20k investment. That works out to approximately 27% return. The neighborhood is about a C to C- neighborhood. My estimation from the time of purchase until the time of completion of all units would be about 8 months total. This would basically be a passive investment for my partner and we could probably work out a buy-out clause after a period of time if necessary.

-Bill Pate