I am someone who will make any situation work... but I think I need external advice from seasoned investors on whether or not it's worth my time and money on this one. please read my confusing list of thoughts and let me know if you think this is a good deal or not...
Any insight would be appreciated!
(My apologies for the terrible formatting. Had issues copy/pasting table from Word doc)
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Category
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Description
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Thoughts
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couldnt figure out how to delete this column....
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House
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Duplex:
- 1900sq 3bd, 3ba house
- 800 sqft 1bd, 1ba apt
Yr built: 1960
Tried to sell for $225k since Apr
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- - Potential to force value though renovations
- - no upgrades made since 1960
- - all required make-ready repairs are mx… not value-add
- - plan is to buy-and-hold, these repairs would be needed eventually… might as well get them done now
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Financials
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Sale price: $199k
Interest: 8%
Down Payment: ~$40k (20%)
Closing costs: $12k
Make-ready repairs: ~$10k
Cash flow: $200/month
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- - still cash flows at 8% interest
- - Cash reserves available for unexpected breaks; paying mortgage myself
- - Must receive combined $2700/month to break even
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Seller contributions
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$2k towards closing
$10k towards repairs
HVAC routine mx
$1k Flood insurance renewal
$250 termite inspection
$125 foundation warranty transfer fee
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- - Extremely motivated old lady… but she’s basically at the end of her rope… nothing left to give
- - So many repairs and basic maintenance needed, even at this price w/ seller concessions… might not be a good deal
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Location
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Donaldsonville, LA
- ~1000 personnel; 500 are contract/temp at any one time
- ~600 employees at Shell in Geismer (~30 min away)
- 1hr from New Orleans
- 45 min from Baton Rouge
- March 2025 – final confirmation of Hyundai steel factory- $5.8B investment; first north American electric arc furnace (EAF) – groundbreaking Q3 2026
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- - Potential for property values to increase soon
- - New/more people expected to enter area
- - Small town – not much new construction & limited inventory: potential high demand for rentals
- - Hard to trust anything in current economic conditions… something could go wrong/be cancelled between now and Q3 2026
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General mx
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- General Handyman tasks = $2k
- Replace rooftop vents with thimbles
- Fix ceiling fan (counterweight)
- Add smoke/carbon monoxide detectors
- Add gutters = $2k
- Trim 2x large trees overhanging roof = $2k
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- - Seller unwilling to perform any of these
- - My $10-20k is going towards repairs instead of renovations/upgrades
- - “don’t know what we don’t know” – will likely find more things as maintenance is performed
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Plumbing
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Inspection revealed cracks in original cast iron and terracotta pipes: $22k to reline all; $8k for cast iron only (from only 1 bid)
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- - Not an emergency *yet*; can defer though not a good idea
- - people think the $22k quote is way too high (2 realtors, 1 contractor)
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Electrical
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Replace cloth and rubber-covered wiring = $11k
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- - Seller contribution of $10k towards repairs mostly covers this
- - MUST be replaced
- - $11k only covers cost of rewiring – not drywall or panel replacement should they have to cut through walls
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HVAC
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- (additional HVAC mx, if needed = $1.5k)
- Add attic insulation = $2k
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- - Seller performing basic mx
- - Both units are old and neither uses EPA-approved refrigerants allowed today. - One is a 2-ton and the other a 4-ton – likely looking at $16k to replace both if they break
- - Attic needs an additional ~7in of insulation added; without it the HVACs are working harder than necessary – shortening lifespan but insulation will cost $2-8k
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Foundation
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Foundation inspection (same people that inserted foundation pillars for $8k suggested adding 8 more pillars for $15k)
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- - Basically every home in Louisiana has foundation issues… it’s a swamp
- - General inspection report doesn’t think it looks bad
- - Mx can be deferred
- - Current foundation warranty exists for life of structure
- - Costly to add additional piling support to remainder of house
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