I'm negotiating a 3unit all 3 bedrooms built in 1840 and needs a lot of work and just had a skunk get in and sprayed in one of the units. I'm going to do a construction loan at 5.2%. Any suggestions on removing the skunk smell? Any advice on buying much older homes?
Good deal or stay away?
Here are the details of the deal:
rehab costs- $60,000
Gross rents- $2,100/mo
What is the ARV? The skunk smell is nothing. A couple coats of kilz if you know where he sprayed and it will be gone. Tear out the carpets if need be. Buy an air freshener.
That's what I was thinking on the kilz.
AVR would be 135-145k
I guess my biggest fear with this property is the age. Do any of you not buy houses because of the age?
Does anyone have experience with older homes? Am I worrying too much?
I own an older triplex and dont have any issues with owning older properties. It is actually built like a rock b/c they used true 2x4's and I believe they are oak, so hard you can barely drive a nail in em!! Good part is this place was well built and major settling has long past. Many older properties were built better than properties in recent years. There wasnt as many codes etc back then so it all boils down to how and who built it.
I would suggest you have a reliable home inspector or builder look it over and discuss your renovations with them to get the best feedback. You shouldnt have a big problem getting rid of the skunk smell especially if your remodeling and replacing carpets etc and painting but I would use a Kilz or my favorite is Bullseye 1-2-3 (has a stain, mold, moisture, and odor blocker).
As to the #'s if they work out to provide enough cash flow for your investment model then go for it. Every investor has a different investment model and guidelines to determine if they will buy or not. Some are more risky and some more conservative. I would highly recommend you consider looking at all the variables and rely more on your evaluation of the deal than anything. I would consider what area rents are and how long the properties in the area stay rented as well if it is in an older area of town.
Best of luck
Older homes especially in that time frame are most likely going to have stone foundation that leaks. This is very normal and even though it leaks it potentially is still fine. Also it is old enough that as long as you keep the gutters clean it will have settled all it is going to settle. Structurally old homes are very solid. The issue is going to be the plumbing drain lines and electrical. You may have some old knob and tube wiring. Even if the panels have been updated other wiring around the house may still be old. Get into the attics and pop off some cover plates on exterior walls to see what the wiring is like. Drain lines if they havent been replaced could be cast iron which cracks easy over time. You can usually have a plumbing company comer with a camera to check out the drain lines. If there is roots or clogs they can use a pressure jet to unclog the lines. Works well. Good luck with property!
Andy nailed it.
You definitely want to get the plumbing and electrical inspected.
A close from of mine had a house from 1880 and they spent thousands to fix all the issues. I would add another 10% to your budget to account for the unknowns. You never know what lies lurking behind the walls once they are opened up.
Best of luck to you
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