I am currently looking to invest in this investment property in the Binghamton NY area, mainly to rent to college students. The numbers seem to work, but of course I could be wrong. Any advise would be greatly appreciated.
purchase price $78,500, doing a 25% down 30year fixed mortgage, (should be below 5%) at current market. got quoted 4.5% on 10/10/14. taxes $3821, insurance $800.
2 family house, 3 bedrooms on 1st fl, 3 bedroons on 2nd fl. second floor rented for $975 till May 2105. 1st fl vacant. potential rent for first floor can be $650-$750 due to one bedroom being very small on the first floor.
Sewer is $600/year, I believe tenant pays all other utilities. Property management will be 10%.
I believe this is a good deal. then came the home inspection.
Foundation- bowing, inward, up to 3", South side of roof needs replacement, and a bunch more. I understand that this house was built in 1910, and do not expect that it be in great condition. I got a quote for some of the items to be fixed.
All prices include matieral unless specified.
Tear off and replace front porch roof $800
replace broken tile in 1st floor bathroom, sand, install new tile, groat, seal. $200
Properly install exhaust and intake vents to 1st floor furnace $120
Install non permiable matieral around exterior foundation and slope away for water drainage. $400
Install gutter down spout $75
clean gutters $120
Insulate basement ceiling $30/hr labor rate ***plus matieral***
Seal all gaps on furnace ventiliation ducts $100
Installation of continious ridge venting. $1200
remove 1st floor bathroom ceiling inspect for mold and water damage, install new sheetrock, finish, and paint $650
Additional cost based on extent of plumbing repairs needed. at labor rate of $35 per hour
Install 2 glass shower doors 1st and 2nd floor bathroom showers, $140 plus cost ****$150-200 per shower door****
replace broken/missing glass in attic window $60
replace broken glass in basement window $40
Replace front porch ceiling $600
Install drain pan and waste line from 2nd floor hot water heater $160
extend sewer ventiliatin line thru roof. $300
correct 1st floor shower water lines by reversing the cold and hot water. $150
Run electric for condensation pipe in basement $120
Run drain line from condendation pump into waste water drain, $70
Replace all attic duct with flexible insulated duct. $6 per linear foot
Mortar interior section of chimney inside of attic $400
Mortar exterior section of chimney $600
secure all loose electrical wiring in basement $85
Tearoff and replace south side of main roof, $4400 Additional cost may apply if board replacement is needed due to rotting or broken boards.
No quote on the foundation yet. Which is the part that worries me the most, because I am not familiar with this. If the quote for the foundation is under $3000, will this problem continue. I am worried that this will continue to eat away at profits.
I still like the location and rent numbers but worried about the foundation. Buy or Pass?
Sorry for such a long post.
What I would do, as far as the long list of repair items, put together a spreadsheet of all non-cosmetic items and copies of the bids submit them to the seller with a contract modification reducing the purchase price by the cost of repairs. If they didn't know about them before now they have to disclose them to the next buyer. They may accept and they may counter. If they don't work with you, move on to the next deal. Even on bank owned or "as-is" properties we have used this approach with success. Especially if the seller tells you there are only "cosmetic" issues. Obviously every market is different, but this is our approach. Good luck.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing