40 unit building, should I buy out the other 2 owners?
I possess 1/3rd of a 40 unit 4 level building in the U-District of Seattle. The building was built in the 60s and was last renovated in the 80s. The interior is old and the entire building could use a complete renovation, with possibly updating the exterior and grounds. We have been getting offers for the building in the 8-9M range. The building currently only produces a in pocket cash flow of 6-9K a month. The existing mortgage is worth 1.8M. We charge on the low end for rent in the area, both for studios and 1B1b apartments. I have a friend who suggests I buy out the other 2 owners and renovate the property with a HUD loan, rather than selling it. This would bring the mortgage to 6.2M including a 1M renovation. Though that is completely estimated. I am actually unsure on the cost for renovation. I figured the high end would be 20K a unit, and a couple hundred thousand for exterior and interior updates. The property is zoned for more levels but I doubt I can leverage the existing equity to acquire enough money to build them.
Does anyone have experience in the Seattle area? I am unsure if this idea will work simply because the new mortgage might eat up all the income, even with the increase in rentals. The other two owners would like out and want to sell. I would like to stay in and try to turn this building into something better. What are some things to consider with this type of venture?