Rental Property Investor · St Cloud, MN · Member since 2016 · 14 posts · 1 vote
Hello Folks, I have a situation for you. I kindly ask for any input from especially those of you who are experienced in the area.
About 7 month ago I stumbled upon 4 boarded up duplexes all in a row just wanting sometime to get them up and running again. I took an immediate interest and decided to look up the owner. After getting to know her and the situation of the duplexes I asked if she would like to sell and finance the deal.
Finally now, after months of working the deal, we will be buying them for 24k down and 2,000/month for four years with a balloon of 286,000 at the end. Also we have the option of paying them off sooner. They need a bit of work, a contractor gave me a rough estimate of 25k each four a worst case senario after walking through them, but we hope to get them in desirable condition within four months and each unit rented for at least 800/month plus utilities.
Our plan for the rehab is to take the building that requires the least amount of work and get it fixed up and rented before moving onto the next.
Investor · Detroit, MI · Member since 2016 · 211 posts · 144 votes
10y
Without including any possible interests your all in is roughly $510,000.00 or $63,750.00/unit. Your maximum estimated gross income is in the neighborhood of $281,600.00
You know the market you are in I will assume. Also buy your figures I would think there are smaller units.
I might consider to increase the square footage on a few of the units to increase their rental income potential.
I would not do the deal unless you are sure the value of the total monies you will end up paying is strongly supported by the current market value of comparable properties in the area, but then again if you can truly get the job done in 4 months time is on you side just remember "Murphy's law".
I am just thinking these properties were just sitting there all boarded up simply earning nothing in the first place.
To my mind the price your going to end up paying on a per unit bases is what I would expect to pay for bran spanking new construction based on my estimated square footage of each unit which I base on your expected rent per unit of $800.00/mo.
The time stated to finalize this deal suggests to me the buyer has had time to get further educated but still if the numbers really make since to you maybe you have made a great deal.
If you can implement tight controls and your contractor is reliable to bring the project in on time and within budget then things should turn out good for you. There are some risks of course and to be honest some potentially significant risks. However if you feel you can adequately mitigate those risks then your in like Flynn.
Best of luck to you and congratulations on your find and finalizing this deal, the initial part of it anyway.