Need advice on this deal
Hi All,
I have been lurking in BP for quite sometime and made my decision to buy my first property. This a 4 unit building constructed in 1916 with roof replaced 3 years back. 2 units has 3 bedroom /1 bath and other 2 unit has 2 bedroom/1 bath + a dinning room. Each unit is around 1000sqft and has a screened porch and a separate stairs to the backyard. 3 units have been rented for $1000/Mo and one unit has been rented for $1100/Mo. The major issue is there is oil heating system which is used to heat the building and provide hot water. The cost to maintain this oil heating system is around $10k. So the basic math is
Cost : $365000
Annual Rent: $49200
Annual Expenses: $21688.64 (which includes $9517.52 for oil heating system)
Property Management: $4920
Vacancy Rate 5%= $2460 (Property is in a very good location)
NOI: $20131.36
My Realtor said I can install four HVAC units (There are no venting system as of now ) and four water heaters. We can pass on the cost to the tenants as they are already paying all the utilities. He is estimating the cost to install this would be $30k. Also another thing we can do is increase the rent all other units $1100.
So projected NOI would be : $33248.88
As a newbie should I consider this property with all the work that needs to be done. Please advice.
Thanks,
Thiyaghu