Is the potential worth the price?

Question

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Pocatello.

Purchase price: $209,900

Duplex, renovated, 860 sq. ft./unit, on .51 acres. Zoned for high density, and has been engineered for 7 more units, 1 4 plex and 1 triplex. If I did it the way they have the plans drawn up, it would change the lot from a nice, green rural feel to more of an asphalt jungle feel, and the parking is far away from the units, in my opinion. I would prefer to add 1-2 duplexes, or maybe a single-family home for myself. Median price for a home in this neighborhood is $174,900, price per sq. ft. $90.

What made you interested in investing in this type of deal?

Moving to Pocatello, and property values are far less here than where I am moving from. Newly retired and looking for a new challenge.

How did you find this deal and how did you negotiate it?

MLS, Realtor.com

How did you finance this deal?

I am pre-approved if I either lease out my current home or sell it outright.

How did you add value to the deal?

Newbie, don't know yet!

Don Spafford · Answer

Don't be fooled by comparing lower prices in Idaho or any other area to an area that has higher prices. Low price does not necessarily translate to a good investment/cashflow. For a duplex in Pocatello $209k is a little on the high end, but if there is room to build more units, it could potentially be worth it.

Ellen McKinley · Answer

Makes sense. I have seen the plans, and they don't make much sense. The parking is quite far from the buildings--who wants to haul their groceries, laundry, etc. from a parking lot that's quite a way from your house in the winter?  I wasn't that fond of the actual layout of the units, either--having lived in rentals when I was younger, I know that arranging things so people don't have to hear their neighbors as much is really important. If I were to do it, I would not use those plans, for sure.

Thanks for answering my question!

Darin L. · Answer

Ellen, the risk i referred to was that i dont know anything about building and the location is not so great because it is far from schools/etc and there are several other rentals in the immediate area. I havent seen the plans, either but can imagine it will be crowded with two more buildings and parking there.

Eric Mitchell · Answer

If you are planning on staying there, I would focus on leaving the things that you find important and making it a place you can call home. You may be able to negotiate a better deal, or get duplex plans with the deal instead of Fourplex (The owner has an Engineer, planner, and surveyor business). This property is next to Ross Park which is a beautiful area, and it is near the university so that would make it easier to rent out.

Ellen McKinley · Answer

Thanks for the input. I realized that a lot of the appeal for me is the location, vs. the investment opportunity, so it just might be worth it due to that if I live there myself. Also, did you see the plans they had made up? It kind of turns the plot into a bit more of an asphalt jungle than I would like. I thought perhaps I could put in a duplex or two instead, so less parking would be required and some of the green would be preserved. The units could be a bit larger, more something I wouldn't mind living in or next to.  Also, if I remember correctly, a lot of the parking really isn't that close to the buildings, which as a renter, would not be that appealing. Newbie question, I know, but what type of risk are you referring to when you say it was too risky to suit you?

Darin L. · Answer

@Ellen McKinley @Ellen McKinley. I have seen that property and considered how I could make it all happen and have two new multi-families at the end of it. There are alot of duplexes/multi's hidden in that area closer to the railroad tracks, too. For me, it just seemed that two new buildings would be too out-of-place to make sense and get past any risk. The concept is awesome but too risky for me.  If you do it, I will be very interested to see how it goes.

Eric Mitchell · Answer

Have you purchased this deal yet? The numbers would look pretty good if you could get those extra units built!

Is the potential worth the price?

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