4-plex purchase strategy - facing capital improvements

[Deb Somdahl]

I am looking at a 4-plex investment. It is built in 1985 and has an original roof, and 2 original A/C (so two are likely ending useful life). I am weighing making a lower offer and planning for these large capital improvements in the near future by setting aside funds, or paying a higher amount and asking for repairs or some sort of concession from seller. Any thoughts?

Seller is open to owner-financing (which I am hoping to negotiate) so I would have to sell or re-fi in next 5 years, so am thinking about how this factor plays in. There may also be more room for creative solutions.

I am new to multi-family analysis. Any insight you can offer is greatly appreciated.

[Jeff Kehl]

@Deb Somdahl It's tough to tell without seeing actual numbers but it seems you have a classic 'value-add deal' which is exactly what people look for. Mostly though on value-adds we want stuff where we can raise rents. What you describe sounds like deferred maintenance that needs done regardless of rent rates so you should try  A) to get the seller to do it or B) to reduce the purchase price by that amount.

This can be dangerous because YOU then need the money to do the work. But if you pull it off can be a great deal in a few years.