2 for 1 property opportunity: Need some seasoned investors advice

12 Replies

Hello all,

I am new to BP and am currently spending every spare second of my time researching and learning about Real Estate. I am located in Spokane, WA where the market was "hot" all summer and is now leveling out a little and is stable. I have been doing my best to educate myself and network with local real estate investors to enhance my knowledge and speed up the learning curve. But, I think I have just found an awesome deal and wanted to run it by some of you to see what you think and to hopefully get some advice on what to do. 

PROPERTY INFO

Zillow Link: https://www.zillow.com/homes/for_sale/23514903_zpi...

Additional Info: https://cp.spokanecounty.org/scout/propertyinforma...

Price: $154,000

Property taxes: $2,100/Year

Estimated Rent: $750 Each

There is a smell, kind of smells like cat urine that I've heard is also the same smell as meth? If this is the case could this be a big problem that is unfixable?

Type: Two separate properties, a 1/1 with an upstairs that could be usable as a bedroom, and a 2/1.

Extras: Three way carport and a off unit that has a side for a car and another side for storage.

Location: A corner lot that has a busy street on one side and across the other street is a aluminum can recycling center.

What other information can I provide to help you all out?

Thanks ahead of time for your input.

My notes at 1st glance:

- If it's cat smell then it's an easy fix with some primer. If it was a meth lab you'll need to contact the city to obtain special permitting as well as testing to ensure that it doesn't have toxic chemicals and is safe for occupancy. In general, unless there is other evidence. other than the pee smell, to suggest that it was once a meth lab then you're probably safe to assume that it's from cats. 

- 154k seems high for a 1/1 & 2/1 on a busy street across from commercial/industrial lot, unless maybe they're in great condition. $750 for rent also seems like a high estimate for a 1/1. Check out www.rentometer.com for rent estimates.

- What is your exit strategy? 

- It would be prudent to get a few bids from local contractors. You won't know if you have a deal on your hands until after you get resale and rehab estimates. 

- Kudo's to you for getting a 2nd and 3rd opinion on your deals. Stick with that habit and you'll avoid a lot of costly mistakes. You make/lose your money when you buy. 

Hit me up if you ever need a second opinion on any of your deals. I'm always happy to help a fellow, local investor. 

Thank you for your time and knowledge, I have decided to pass this up. I ran the numbers and I didn't like what I was seeing. Becuase I am new to the real estate world and new to Spokane, I am still working on my exit strategies. I am networking on BP and through my agent as much as possible so that one day I could have the option of selling out to other investors. I'll keep you in the loop when I find a property that I see where the numbers work out and see if you can give me a second opinion. Thanks a lot!

@Bo Baker Great information provided here by Jacob.   One thing I would also look into is getting financing for 2 homes/residential building on one lot.  If you are at 4 or less units then it is considered residential not commercial and in my experience getting a conventional loan on a 2 homes on one lot is extremely hard.  Another thing like Jacob mentioned is your exit strategy.  If you plan to sell 2 homes on one lot then your pool of buyers is significantly smaller and consequentially your net amount from your sale can be significantly lower.   In my experience the most popular way that I see these theses 2 on 1 deals sold is on an owner finance deal where the owner is the bank.   Great job on your analysis and reaching out to others.  If you have any questions or need help looking at or finding sweet deals hit any of us up!

Keep up the hard work Bo! 

Cheers! 

Oh, wow. I never knew anything or thought about, the significance of the exit strategy of this property being on a single lot. That is really good information to point out and bring to my attention, thanks! Now that I know that, I will definitely keep a close eye out and make sure I come up with a great exit strategy.  That way if I find an incredible deal on one of these through my investor journey, I will be more prepared. 

Good morning everyone, great advice and conversation. I was just reading along and wanted to bring some perspective from a different market to ask a question. Do you think it is a local point of view regarding two house on one lot being less desirable and harder to sell? I find that here in NY it is desirable to find a situation like that. Having the ability to bring an extra income is very beneficial and to have the tenant in a separate house is even better! I just wanted to get your thoughts on that a little deeper.

Have a great day!

Adam Cherko, Real Estate Agent in NY (#10401303276)

I think your property taxes are significantly higher in New York as compared to what we pay here.   I'm not sure what part of NY you live in, but one of my friends who invests around NY pays $16k in taxes where in Spokane WA he would pay about 2.5-3k max.  I think that could defiantly be taken into account in the purchase of an investment, especially after factoring in the duration of ownership.  

@Dan G. and @Jacob Evans , I have talked around a little bit about local lenders. Would either of you have any recommendations? 

@Bo Baker I use a local private money lender for all of my deals. If you get something juicy under contract within Spokane County let me know and I'll make the introduction. He loans at 11% & 3 points on the 1st loan, but will bring his rates down and will fund the rehab costs on the right project, after he has a good relationship with you. He likes helping with long-term stuff too and will write his notes for up to 5 years if needed. 

I know of 4 other hard money companies in town, but their rates are not as competitive. Typically 4-6 points and 12% + junk fees. 

Originally posted by @Jacob Evans :

@Bo Baker I use a local private money lender for all of my deals. If you get something juicy under contract within Spokane County let me know and I'll make the introduction. He loans at 11% & 3 points on the 1st loan, but will bring his rates down and will fund the rehab costs on the right project, after he has a good relationship with you. He likes helping with long-term stuff too and will write his notes for up to 5 years if needed. 

I know of 4 other hard money companies in town, but their rates are not as competitive. Typically 4-6 points and 12% + junk fees. 

 Awesome, thanks for the info. If I find something I will definitely be in touch.

@Jacob Evans

Does your guy lend in Western WA too?  My hard money is currently at 8-10%, 2 pts, but it sounds like he might be able to go lower with several loans (or to an experienced borrower).

Does he typically not fund any rehab?

Hey @Nghi Le , sorry, but I've tried multiple times to get him on board for loans out of our area and he just won't budget. He'll only loan on local projects and to borrowers that he gets good "vibes" from. He's a true private money lender. 

But yea, he is typically okay with funding rehab expenses... 

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