Making an offer on a quad - Thoughts?
I'm making an offer on a quad tomorrow. I understand that unless you are from my market of Richmond VA, you may have limited commentary, but wanted to put it out there for thoughts.
-PROS
1920's quad in an up and coming historic district of Manchester (south of the river in RVA)
All brick, renovated in 2007 (gutted to studs, new electric and plumbing)
$700 average rent per unit
Rents under market by 100-150. Grad school colleague is partnered with a guy that owns 40% of this neighborhood....he knows the rents and says this is under market. I agree based on my own research.
Asking price is $350k. Offering $300k, will pay $325.
Tenants pay all Expenses
Opportunity to raise rates - kitchens are below market, 2K will allow a 20% raise in rates
CONS
New construction - as an up and coming district, many new units coming on market. Same friend as above has an apartment tower with all modern amenities coming online next year, and another under way. My company has one proposed. Inventory is about to increase dramatically, but this is all new, expensive construction. It will be at the most a positive.
Current owners bought and renovated in the recession. We may be buying at a peak.
Since it was renovated in 2006/7, all infrastructure is nearing average replacement age. HVAC looks great, but given the age could fail any moment. As I typed that, it gave me resolve to stick to my asking...