Rookie Investor’s Dilemma: Roof Leaks, Old Carpet – Worth the Risk?

[Boddupalli Sai Praneeth]

Hey everyone,

This is my first property ever and I am in a large metro city of CANADA. This property has 2 units with separate entrance. unit A: 3-bed/ 1 full bath and unit B: 2-bed/ 1full bath built in 1969 with a lot size of 45*214. The house size is 960sqft. A foul smell upon entering the building ( something from carpet I assume) has several spots of leaks on the roof (almost every bedroom has one). Did not find any slope issues in the main floor or in the basement. Has plenty of junk in storage room in the basement. The listing price is around $330k. There are two schools with in walking distance. I need your suggestions on how to estimate the repair costs and what should I offer?

I am assuming the following costs:

Carpet replacement assuming I would change 60% of the area: $2500

Repairing leaks and re-shingling: $6500

Changing appliances and renovating both the kitchens: $13,000

I will get the inspection done and also would like to include that in the condition. Should I worry about any other surprises..? Is it a good deal to pursue? How much should I offer?

This property could get $1800 for unit A and $500 for unit B (I will be sharing the other room).

Here are the estimated numbers:

• Purchase Price + repairs+hidden surprises: $320,000
• Interest Rate: 3.99%
• Down Payment: 5%

Expenses:

• Mortgage: $1,502
• Property Tax: $344
• Garbage fee: $22
• Insurance: $100
• Utilities (not paid by tenant): $200
• Maintenance & CapEx (10%): $216
• Vacancy (5%): $108
• Total expenses: 2603
• Total Income: $2300

Cashflow: -$208 (I am no longer paying $1200 in rent, should I be happy that I am actually saving $1000)

when I move out I can charge $1200 for the unit B. Then my cashflow would be around $700. Is it a good deal?

Can any of you experts suggest?

[Caleb Brown]

Would it pass for an owner occupant loan? For owner occupant loans I do see appraisers pickier and if the roof is faulty they might mark that as a requirement. I would get bids for the roof, $6500 seems on the low side. What would the ARV if you updated it? Doesn't seem like a bad house hack. Make sure you have savings once you complete those repairs.