Okay guys , so I think I might've found my first deal 4 unit mixed use property right outside of Rochester NY , 2 store fronts that need a little bit of work , maybe carpeting . And 2 2 bedroom 1 bathroom apts above the store fronts , the price was originally at 50k , went down to 40k and now dropped to 25k . The upstairs apts are in need of flooring , one might need a kitchen , so looking at around 20k worth of work , according to owner , arv is around 120k . I see houses in the area recently sold for anywhere between 50-120k but none of them I see are mixed use buildings . I have 32k saved up , should I pull the trigger ? Also property taxes are around 3-4k . This would be my first ever real estate deal . Population for the town is 1750 as of 2014 , average rent is $660 . The property is across the street from the library , within 1-2 blocks radius of the post office , diner, pizzeria ,churches , dentists office as well as other small businesses , what other information do I need before pursuing this deal? And what precautionary measures should I take before actually purchasing , keep in mind this is my first ever real estate purchase , so I need a walk through of everything . Any input is helpful !! Thanks so much in advance !
Population is actually 7,900 my mistake
@Faysal Alam First, never believe the seller. I've had sellers tell me just paint and carpet and I get there and I think the place needs to be torn down.
Figure out what YOU want it to look like after rehab and how much that will cost you. And figure out the ARV for yourself. Western NY is awash with vacant store fronts. As part of this make sure the structure is sound.
Second, as for other information, how about will you be able to rent it? Maybe the 2br apartments are too small and will have to rent the same as 1br. Maybe the store fronts will stay vacant for years. Maybe there are two dozen similar vacant buildings right around this one. Western NY is awash with vacant store fronts.
Generally speaking, I'd shy away from a mixed use property as your first deal.
I kinda agree with @Larry T. there is presently a storefront vacant building right at the corner of where i leave, the store is rented out but the apartment is vacant and it has been like that for at least 2yrs.
You also need to be wary of the location, correct me if i am wrong but buildings were there are apartments and stores are technically in D, E locations which could have a lot of issues. this is based on my drive and stay in Rochester NY.
Your located in NYC, i think you could take a day or weekend off to come down here and check the neighborhood out. What it looks like in the day and in the night, especially on the weekends so you can have a clearer picture of your expectation but i am assuming that your going to get a PM to manage the property
In my opinion i personally wouldn't go for this deal.
I would first check what the building is assessed at. 3-4k in taxes for a mixed use building seems crazy low. I pay that for a 50k duplex. Mixed use is commercial which is taxed at a higher rate. If you are buying in an area that is selling for 50-120, you will see your assessment go up after you purchase it and fix it up. I'm also thinking they didn't add in the county taxes and are only telling you what the city taxes are.
What town is this in? That would go a long way... from what you're saying, I'm guessing East Rochester?
@Faysal Alam. I live and work in NYC but own several mutlifamilies, all in East Rochester. One of them happens to be a mixed-use commercial and residential space.
First, traveling from NYC to Rochester area is very taxing indeed, not just a day trip. From door to door including stops it can be 6-7 hour drive.
There are opportunities in the Rochester area, but unless you know the market and have troops on the ground I don't see how it could work doing everything remotely from the city.
@Steve Santacroce ..... there is no property in East Rochester that can be bought for $25K under the conditions listed above.
You guys are right and probably know this a lot better than I do , it's actually outside Rochester , it's a town called Holley , NY . I think the taxes are closer to 5k a year than 3-4k . I guess I'm getting a little impatient looking for my first deal . But I don't want to jump the gun and invest in something bad so I'll definitely keep looking . Mixed use probably isn't the way for me to go especially since this is my first property .
@Thaddeus D. I wasn't aware of any myself, but it's the lowest priced 'burb that I'm aware of, unless he's going further out like Perry or Warsaw...
Also def agree with the remote management aspect! Especially since it's a mixed-use.
Holley is out there. Plus those storefronts will be difficult to rent (at least I think so) I would be curious to ask why they are vacant, how long has it been since they have been rented and what type of businesses were in there prior. You can buy mixed use in the city of Rochester all day with storefronts. Same concept- small retail is tough in neighborhoods. If I were you I would hold off- it's a tough market and nothing wrong with being patient. No deal is better than a bad deal- I have not made a purchase in 2017 and am itching too but I love in Rochester and wouldn't want to go way out to holly.
- from a guy looking for a few deals but being patient
I would agree with Matty P. I also felt rather impatient to buy my first deal and I now wish I had held back a bit longer to find a great deal. It's good you recognize the feeling. Be patient, listen to your gut and follow the awesome advice from these Rochester investors.
I definitely will ! Thanks for the advise guys , really appreciate it !
Whatever you buy I suggest managing it yourself for at least 12 months. I learned so much self-managing a property. I have heard BP podcasts where a person goes for the home run and buying an apartment building their first time. I think that can work. Be patient, but one SFH is not life changing. Find a deal, run the numbers, and make an offer.
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