Hi all, REI newbie here. I currently live in Arizona and recently purchased my first duplex in Phoenix, AZ. Yay!
Being able to work from home because of the pandemic, I decided to go to (and work from) Delaware where I have a ton of family. I found a 1925 triplex with a for sale sign, called the agent and found out that property was not on market yet. 2 units rented ($700 and $600)and 1 vacant. I was told that house was $100,000. I went in to see the house and these are the issues we found:
1. It looked like the roof will need to be changed ASAP. There were multiple water leak signs and the top floor ceiling looked like it was about to fall in. Plus there were many cracks in the top and middle units ceilings.
2. The vacant middle unit was inhabitable. It would need at least new floor, new paint, new windows, and a DEEP cleaning.
3. There were obvious signs of a rodent problem.
4. Given the rent price of the 2 units, I was considering keeping the current 2 tenants if I was to get the house. But the listing agent insists that they gave the tenants leave notices and tenants will be gone by December 31st.
My questions are:
Has anyone else been in a similar situation with a house almost 95 years old?
It is worth negotiating a price, knowing that we will need to do a lot of repairs? (70% rule). Also, I don't thing the ARV would be more than 120K.
Are these all just red flags and I should just drop it all and walk away?
Is the tenant issue a red flag?
Please share your experiences. Thanks in advance!
I've BRRRed 100 year old houses before. But negotiate the price. My century old houses are all duplexes. I paid between 90-120K for them. Each side rents for ~900. My all-in price for a century old duplex is 120, so I start there and subtract out all the repairs and that's what I'll go as high as in the negotiations.
Thanks for your advice Jim.
I live in a 1925 house. I won't let my clients buy one as an investment - nor would I. It's not so much that the house is near 100 years old as it has to do with all the idiots who touched it during it's life - especially during the time of the Big Box Home Stores. Some people should be banned from Home Depot.
Also, know that your insurance costs will be higher. Properties older than 1957 come with a premium. Problems with foundations are common. Most of these properties still have cast iron plumbing and knob & tube or older wiring (which isn't insurable either).
I loved the charm of an older home. But the charm quickly fades with the reality that behind every wall, every outlet is something that won't be a cheap date to fix.
Hope this helps...
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