Need 2nd opinions on 4plex
This 4plex is in Philadelphia and the owner wants 269k. Gross rents last year were $31,200. It needs roughly 40k in rehab to increase gross rent to $37,200. It also has 2 garages that can get $125/mo a piece but were not rented. The numbers look good but the property only has 1350 SQ feet total which makes this property 207/SQ foot when the average SQ foot price for the area is 135 SQ foot.Will this cause a problem for building future equity and refinancing in the future with the SQ foot price being so inflated?
@Brian Miller what is the market value for the property? Smaller square footage does tend to increase price per square foot but you want to make sure it has comparable sales. This is especially true if you are financing with a loan but also to ensure you are not overpaying
I can not find a really good comp or the exact market value, as this is the only 4plex within a few miles. Duplexes with similar amount of bedrooms/similar conditions within .3 miles average around $230k. I may need to just get it inspected and appraised
@Brian Miller A lot will come down to the income it generates, even if there are not good comps nearby. As long as your confident with the rental numbers, that will be a big factor for appraisers.
$40K rehab is not bad for a 4-unit! Does it have a sprinkler system and alarm system already? Those are things that many bigger multi-families in Philly don't always have that you can get dinged with later on.
Alex Capozzolo I seen fire alarm pulls but they looked disconnected for one reason or another. I didn't realized they would need these things being under 5 units, but then again I don't know everything. And yes it will generate sufficient income, but I also was concerned about gaining equity also. I am confident however I can raise rents a minimum $100 per door to match surrounding rent prices. My end goal is to rehab, get it running efficiently, and sell 5-10 years down the road.