Potential Deal in Connecticut Any Thoughts...

[Dean DeMattia]

Hi All,

I came across a unique situation and wanted to see what the BP community thinks. I'm currently in a single family house hack(renting 2 rooms out) and stumbled upon a potential new deal. I'm in a high-cost appreciation market so it makes no sense at this stage of my investing journey to invest locally. I'm looking for cashflow so I located a property roughly 20 miles north of me. It's a condo with low HOA fees and investor friendly. A tenant has be living in the unit for 18 years and their lease isn't up till October 2023. It has gotten a ton of views but no interest in my opinion because it's a small deal and most investors would like 3-4 family properties in that area. It's under 1k sq feet and has been kept in great shape just needs some cosmetic touches. It's being rented for $1,175 but one of the same exact units just rented for $1,350. My thinking is this must be a decent tenant since they made it through the bad times (07'-09') and they keep the unit like it's their own. The cashflow after PITI, repairs, and vacancies is almost $200. With an increase in rent it will be closer to $300 a month in cashflow. From personal experience I'd need to do due diligence regarding the condo association, tenant background, and the taxes will go up slightly. If purchased, my options would be:

1. Keep the tenant and raise rents reasonably (like 5% or $50) and have a certain % increase built into new lease.

2. Help tenant move out and do small renovation to bring rents up to market.(get around $1,350ish)

3. Have family members that are looking to retire and might want to rent for a year while waiting. Will allow for renovations while living in the property and can easily afford $1,350 a month.

Thanks in advance for the help!

-Dean 

[Scott Hollister]

@Dean DeMattia if it meets your investment criteria then buy it. My advice is to keep that tenant as long as you can, and marginally bump the rent. They aren't that far off from market and having a tenant that long in a space makes me wonder on how much the turn costs will be to get market rate. But biggest concern with condo is the association and how it is ran, you want to make sure its a "healthy" one.