Triplex Rehab, Refinance, and Hold Case Study

[Quinton C.]

I have been working through this analysis, I am very new and have 0 investment properties.

This is a property that has been on the market for 6mo. My goal is to come up with a strike price to put on the table, though I do not think the seller is motivated. Property is located in Janesville, Wisconsin and is triple digit old and a case study for how to defer maintenance on everything though currently occupied. My plan is to prioritize building envelope and do minimal interior work to stabilize property value, submeter electricity, and add RUBS fee to recoup utility cost.

1. Ask Price: 120k
2. Bid Price: 99k
3. ARV: 165k (possibly more, this is a comfortable number)
4. Rent: $2040 (currently rented numbers, includes all utilities)
5. Repair: 47.3k
   1. Roof Repair: 6k
   2. Gutters, Fascia: 3k
   3. New Siding (whole building): 8k
   4. Grading: 1.5k
   5. Misc. Trim: 0.5k
   6. Full Interior Paint: 4.2k
   7. New Carpet: 4.2k
   8. Deep Clean: 1.2k
   9. Full Replace of Knob+Tube electric: 10k(+)
   10. 20% Contingency
6. Near Future Repairs
   1. New windows
   2. Full roof replace likely in near future
   3. Pieces of interiors need updating due to wear- shower stalls, some cabinets, etc.

Risks:

1. 1. Analysis depends on being able to recoup most of the cost of utilities while maintaining existing rent. I think this is possible with market rents but everything really hinges on this.
2. 2. Contractors in the area are currently very busy, it may be difficult to manage this breadth of scope on a reasonable schedule.
3. 3. The property is very poorly maintained, there are likely to be many other surprises along the way. My repair estimate is almost certainly on the low side of all that could be done. There are signs of water damage on the interior, I would just be painting over this for time being.
4. 4. This doesn’t meet 70% rule, though plan is not to flip but hold.
5. 5. Analysis assumes I can refinance at 70% LTV, and that what I will put in will get it to full ARV. Not terrible if I can't get this.
6. 6. This would be my first property, I am out of state but have a personal contact in the area to check in.

I am hoping someone will pick this apart and give some feedback!