Debating purchase of 6 cottages on 1 property

[Ken Cyr]

Hello, my name is Ken Cyr, and after months of listening to podcasts, and a webinar, I decided to join the community to help pave my path! 

A little about me; I am a licensed plumber, and just launched my own company 6 months ago, and have been doing exceptionally well. I owned a single family home for 3 years, slowly remodeling every single room in the entire house, as well as a beautiful addition with a full bathroom, and turned a great profit on it. 

I've always known that I wanted to purchase rental property,  and now that I have the capital to do so, I'm ready to start looking for a great deal, but I have alot of questions, and need some guidance.

My wife and I are debt free, with no mortgage or car payments, and perfect credit scores.  We have our eye on an interesting property, and are seeking some guidance on an appropriate offer.  The property consists of a main house, that has been gutted and reframed, and needs to be finished,  as well as 5 small cottages, mostly around 800 square feet, that need complete remodeling. 

The property is 2 blocks from a beautiful beach, in an up and coming area. 

Anyone willing to help us on this? 

What types of questions should I ask? 

What steps should I take to submit an accurate offer? 

[Brian G.]

@Ken Cyr welcome to BP. Are you working with a realtor? Mortgage lender? PM company? Contractor? This is your "A-Team" at a moment like this. To answer your question, you need to do a full evaluation of all the expenses on the property to "back in" to your offer so you know what your return is potentially and whether or not that is acceptable to you. Expenses include: mortgage (P/I), taxes, insurance, maintenance/repair, Capex for those future big expenses (roof, hvac, etc.), lawn care, property management, vacancy rate, turnover costs, etc. In addition, you want to know exactly what they will rent at (a property manager is the best person to answer this authoritatively). If the property is 2 blocks from the beach then I'm sure this property is desirable. In the end, the most important consideration in my mind in a buy/hold property, is buying a property in a great location that people will want to live in. It sounds like you might even be able to rent 1 or 2 of those cottages as short term rentals (ie air bob, etc.) since it is so close to the beach (ie if city ordinances allow). There are calculators on this site under the "Tools" tab that you can use for free with limited frequency. Or simply post all the numbers including purchase price, expenses, etc. and the BP community will weigh in (don't include the address since this property is for sale). The trickiest part seems to me to be on the lending side. It may be challenging to get a loan on this property if all the units need rehab (ie are they currently occupied?), so you may need to be a cash buyer if you are not experienced or possibly negotiate owner financing. @Chris Mason what are his loan options given the situation (presumably he needs a portfolio lender)? Ken, I'm not the most savvy or experienced investor for sure, but if you ever want to talk let me know. Nothing to sell, no angle here. Again, if you simply post the deal details (don't include the address) the BP community will definitely weigh in (we're an opinionated bunch!).