In need of deal advice!!!
Hey all,
This is my first post. I have been listening to bigger pockets for a while now and finally got to a point where I think I would like to hear some advice on this current deal I have in the works.
Here is the nuts & bolts...
Im buying the Triplex through a 3.5% down FHA Loan. The company I am under contract with the home has some history of questionable work to say the least. We did a very thorough inspecition of the property and it needs: New roof, AC, Insulation, Windows, minor electrical issues, new stairwell, main drain replacement and it of course has termites. Sounds like a lot but most of it was expected. The subfloor and wood frame also doesnt seem in great condition so could be looming problems in the future. Of course no permits done on anything on the flip except for two front windows, which could make selling tough in the future.
I have a vacation rental property management business and expect the gross rent on the property to be $75,000 a year conservatively.
Purchase price before ther terrible inspection was $339,000 which was negotiated hard and down quite a bit from listing. As is contract and my decision needs to be made by this friday. I am going to ask for more concessions and some things will have to be fixed to even aquire insurance on the property.
I dont have an appraisel yet, but i believe it will come in $350,000 or higher. When I add appliances, AC units, new roof and a number of other upgrades I would expect to see an increase.
I expect to refinance in 6 months to a year with increased value. I Plan to live here a year and rent two units for $4,000 a month then refinance and find another property. If it was my home forever I wouldnt touch it. But as a short term rental i dont think guests will see or understand the defects of the house and i can slowly fix the issues over time. I calculate out of pocket costs with downpayment and neccesary repairs to be $75,0000.
I guess im just asking you all to justify a bad purchase if in fact it apprauses over value and I add a good bit of value to the house it would make sense when refinancing possibly trying to cash out.
Thanks ahead of time,
M