Potentially my little sister's 1st deal. Is this a good one?

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  • Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
    8y

    With it being a historic house, I would definitely budget A LOT more for repairs. Both monthly and up front. It's almost impossible to get into any property that won't need any repairs on purchase. But that's especially true with older properties. I also don't see a cap-ex budgets in there. Once you get into historic houses, you have all sorts of fun expenses. It could still turn out well, but with such a low budget for repairs it will probably end up costing her quite a bit more up than she is anticipating. It looks like she's already paying more than the ARV, so I would suggest trying get a bit lower on the asking price and budget at least $10,000 reserves up front for unexpected surprises.

    Also, one more thing to consider on a house hack. If she had all units vacant, could she still afford the mortgage? Ideally that won't happen. But it's a real possibility that she will need to consider. 

  • Bloomington, IL · Member since 2018 · 8 posts · 1 vote
    8y

    @Cassi Justiz Thank you so much for your input.  Do we still do Cap ex if it's only 4 units?  Guess it doesn't hurt, but I thought that was something we only factor in for 5 or more.  

  • Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
    8y

    Yep. You definitely still want to do cap-ex. You will still have roofs, AC units, appliances, insurance deductibles, etc on the smaller properties. So it's best to go ahead and budget for all of it. 

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