Hello my name is Rudy and I've been given the opportunity to acquire my first investment property.
A little description on the property. It's location is 7774 Maple Ave. Fontana Ca 92336. Sellers price is $168,000. Lot size: 0.9 acres. House on property is in bad condition.
My initial idea was to purchase property and turn it into a multi family building. According to the city of Fontana the property is on a residential zone where apartments cannot be built. They also mentioned that the only opportunity I'd have to build multiple units would be to divide the property into to two parcels and build two units (Duplex) on each parcel.
I see this property as a good investment opportunity. Being my first I'd like to see if there are any ideas on what could be done with this blank slate? Should I divide the property into two parcels and build two duplex? I'm looking into making this property a long term investment.
This is the Zillow link to the property:
Are you holding on to this (i.e rental property) or flipping it? Have you considered fourflex?
I've considered holding this property as a long term rental property.
Welcome to BP, this is a great site with tons of information.
If this is your really first endeavor in Real Estate, I would caution you against the strategy that you are proposing. It is a very interesting strategy and without knowing all the numbers involved, I can tell you that it is more complicated and lengthy than it seems. Subdividing and new construction is a lot of work.
Have you done all the math on this?
As I understand your post, you are going to buy this property for 168k, then you are going to try to subdivide it (yes, less than 5 lots is easier than 5 or more, but it is not as easy as it sounds), and then you are going to build new houses that you will rent. Your strategy is to buy and hold.
How are you going to carry all this? are you buying with cash or financing? if you finance it, you should be careful if you demolish the house without the lenders consent as the lender may be considering that house as part of the collateral
Then again, part of your strategy should include to salvage the house so that you only need to build one additional house. If you salvage the house, then you can do min repairs and rent it to help carry the project to the end.
Have you considered the rehab cost for salvaging the house plus the cost of building a new house or the cost of building 2 new houses.
How will you finance the new construction? not a lot of lenders finance new construction and this is a more complex process and more expensive than getting a regular agency loan.
Anyway, this may be a more complex project than it seems and more complex than getting a cash flowing property with simple or no rehab.
Hope this helps,
@Juan Carlos Quiroz Zolezzi Juan has very good points. I agree that the property you are considering seems like a very complex deal that requires a lot of experience to have it done correctly. I'd encourage you to find a simpler deal with a house that is in salvageable shape. It is best to start out investing with simple deals and then grow from there. That way you're able to gauge the deal better and learn from your mistakes. If you do a deal and you make 1 or 2 mistakes, then on the next deal you'll say, "I won't make that mistake again." But if your first deal has so many mistakes made all at once, you may be unable to explain what exactly went wrong in the deal due to the complexity of the deal and all the moving parts.
Rudy, love the ambition and ideas but lots of sage advice above about the complexity and moving parts of your initial idea (and this is a great place to get it vetted, so good on you there)..
For just getting started, a plain vanilla duplex (or simple SF) that cash flows and perhaps only has some cosmetic flaws might be more practical; the deal you are pondering right now some type of combo rehab/rezone/replat/buy and hold strategy that may or may not be possible or practical (albeit there may be potential but this is like a black diamond ski slope, to use an analogy, and you may want to start out with one of those green ovals for starters as an REI beginner).....move up to those blue squares, and maybe think about a deal like this in the future when you have the network, knowledge, and experience to see if it will work and how to make it happen.... Best of luck
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