Great Duplex right next to major university. Need Advice
Hello,
I found a great deal on 2800+sq ft up/down duplex three blocks from major university in MI. The first floor is a 2/1, and the upper a 3/1. Both units have the square footage to make adding a bathroom in each extremely feasible making the house a 7/2. When we were in the house renting it (before we moved out) the upper and lower were both rented out for $700 each.
If I get it, I will add the two bedrooms making it a 7/2, turn it into student housing, and charge $450 per room (which is the going rate of a room in this town). The rehab would cost me $5000. $1000 for each new bedroom, and $3000 for installing carpet of the extremely beautiful Birdseye maple flooring. The house is a beautiful turn of the century 2.5story home.
The house is $150,000. I ran it through the BP rental analysis tool, and it said that I should make around $1500 after all expenses.
I have an attorney doing all my paperwork, and using the ARV of $189k, I offered the guy $132,000.
I currently have a SFH that I am doing a value add to that I bought for $196k. It is next to a private law school in the twin cities.
The value when I finish (adding two beds and a bath is $250,000. I bought it with an FHA loan, and was planning to sell it July 1, 2016 (FHA year and one day).
So, I don't have enough money for the full downpayment. But should have enough for something. They own the property free and clear, and have for 30years. They also, do not have a realtor anymore. The house sat on the market for 365 days without a single offer. I lived in the town for seven years during college, and the college is booming but the town ebbs and flows with the energies sector. The area is a depressed but growing area.
Aaron M.