My wife and I bought our second investment in Georgia, SFH with 3 beds and 1 bathroom.
We had a good chunk down, 25%, and now are saving up for the next one.
We came across this solid 4 plex that just popped up and being it's on the market for 2 months now, we can definitely play with negotiations. However, to get this property, the lender says we need to put 25% down on this $270,000 property. With closing costs, that's approximately $70,000. There are some repairs needed, possibly $10,000 per unit.
3 units are still rented out, 4th one just went vacant. (Renting at $600 each -> rental market there can get me about $700 each when updated)
There's got to be away to acquire this and BRRRR it in some sort of way.
Any and all suggestions are welcomed!
@Kanwar Sodhi What you described sounds like a good investment but on paper it's probably not. The only way to BRRRR this property is by purchasing it well below market. I don't know market but the ARV (after a $40K remodel) would probably need to be at least $350K. If that's not possible I'd pass on the deal. The cash-flow at $700 per month barely meets the 1% rule, and you still get to deal with inherited tenants and unknown lease agreements. My advice?... walk the property and look for issues. Obviously it's priced to high or $10K per unit is way low and investors don't want to touch it. Cheers.
@Kanwar Sodhi Well either pull equity out of your existing property and/or find a partner to raise capital.
@Jaron Walling Being an investor, I think I was very excited about the concept of purchasing a 4-plex. I definitely need to properly run the numbers to see what purchase price I should purchase this at. Thank you for that reminder, sir.
@Peter M. After running the numbers, I'm sure people would be willing to partner with me for a good deal. Selfishly, what's the incentive for a capital partner who wouldn't get any equity? I'd offer them more money? Haven't navigated those waters yet. Thank you
@Kanwar Sodhi if you're not giving them equity then they would want a better interest rate on the money they're loaning you. It might make the deal unfeasible. I wouldn't loan 50k for a marginally better rate, I'd want equity. And I agree with the previous post, 2 months in this market means there is something very wrong with it. 10k per unit is fine if its just cosmetic but you start needing common stuff like foundation, roof, boiler/plumbing and your 40k budget is gone. And for only $100 increase/month? That's 100 months to break even on your investment. Not great.
No equity for the capital invester? Then its basically a loan.. most HML are 10% and points.. maybe try an inner ciricle for private money?
As other have said, you need to be in at a much lower price for it to work. If they haven't reduced after two months in the hottest multi market in every state, they are being stubborn. I would figure out what number makes it work and offer that, even if it's low. And when you do, fully explain your offer and why based on the rent roll, repairs, etc. Sometimes the numbers look ok, but unit rents at $600 don't do much for me as it's not a big commitment from the tenant. What general class neighborhood is it?