Looking into a property that was originally a single family home that the top floor was converted into a 2bed 1 bath 1000sqft apartment and the bottom floor was converted into a 4 car storage garage. The owner was using the garage as a storage facility for a nearby business. The property sits on over an acre of land in prime location close to a community college, large hospital, and public transit. The intentions are to convert the 4 car garage into an additional 2 bed 2 bath apartment so we can buy and hold the property long term.
$160k purchase price.
$100k in updates/garage conversion
Comparable duplexes in the area range from $290k for old homes to $380k for newer builds.
Comparable rentals go for $1200-$1350 per unit, totaling roughly $2700 a month. This would cash flow approximately $700 positive cash flow per month with an additional acre of land to expand in the future if we choose.
This is my first prospect for an investment property and my concerns are in the renovation costs. Those numbers are based off a median average of local contracting companies. The concern comes in that I would need to use "creative finance" to get that cash together. I have 3/4 of the renovation budget available in a HELOC out of my primary residence, but would need to use hard money for the remainder.
In or out?