i went to look at my first property

6 Replies

so i went to look at the house today and i might have found a really amazing deal. but theres also some downside to it

the place is a 4 plex in a low income neighborhood

the street the units are on is really shady... and the houses need some serious painting, drywall touch up , clean up and junk removal. they look pretty junky but seem to be fully functional in terms of electricity hvac plumbing, and structure. the exception is that one unit is still on fused based electricity so it needs to be replaced.

that being said i see some really good things in this property.

1) out of the four units 3 have been rented out for 5 or more years. and apparently is usaully easy to find tennants in the area

2) one of the tenants is a career construction worker who said he would be interested in working with me to fix the place up ... maybe on some type of reduced rent agreement

3) this same tennant suggested that the seller is much more motivated then he seems and said he really thinks the guy would take 10,000 less than his 65000 offer

4) even in its current condition this place seems like it will cashflow pretty easily

i think this property could be an amazing oppertunity but it will also be alot of work... especially for my first property. in some ways the idea of my first property being a fixer upper really scares me

so now i have some more questions-

1) whats an average inspection price ( assumer 4 2/1 units )

2) whats an average inspection cost

3) any advice

3) any advice

Before you do anything else, run a cash flow analysis on the property, using real world expense numbers.

Only after you decide it's a deal should you spend money on an inspector. Also, depending on your state laws, you should be aware that a 4 unit may be considered commercial by the building code and you may not be allowed to do some of the work yourself. For example, here in Ohio, for 4 or more units, you need plans and a commercial electrician to do electrical work, even on your own 4-unit building. That's a LOT of extra expense. Just something else to think about.

Mike

the place definately cash flows. because its so cheap for a 4 unit its not really hard to create positive cash flow.

i thought it was always 5 units to become a commercial property so ill definately have to look into that.

also my grandmother who is a re agent said that in some states you cant sign contracts until your 21. that seems kind of illegal or unconstitutional or something so i wanted to find out if thats true. by the way im in PA

i thought it was always 5 units to become a commercial property so ill definately have to look into that.

It is a little confusing. For LENDING purposes, 1-4 units is generally considered residential. However, for BUILDING CODE purposes it can be different and IS in fact different in Ohio. In Ohio, 1-3 units is residential for building code purposes and 4 or more is commercial.

Mike

Another thing to consider which I have also, is if the area is so bad, do you feel good enough about the area to work there and if you're married, having your wife go into the area alone. I have found several properties, but I could never allow my wife to go into the area alone to rehab the homes.

the area is not great but i dont think i would feel uncomfortbale worrking there...

i am kinda thinking that this neighborhood is a little to run down though. i feel like even i fixed up a house here no onee wants a nice house in the middle of a bunch of run down ones. im gonna havee to go back and take more notice of the condition of the rest of the neighborhood