Need advice on possible purchase
This is in Canada, but I think the principals of renting are essentially the same as in the US.
Asking Price: 249,900 - older building that .
Pluses: Long term tenants who want to stay, building has been decently maintained, no major work required at this point. New roof four years ago. Small town has less than 1% vacancy rate, most buildings have a 2-3 year wait list.
Minuses: Windows are very old, but well maintained and 3 of 4 tenants pay heat and hydro so replacing them would not be a large saving to me to have new windows put in.
We would be putting 20% down at 2.84% over 30 years. Taxes are currently $2700/yr, Insurance (estimate at this point) $1200/yr, Water/Sewer $4000/yr, Maintenance $1700/yr, hydro (landlord pays hydro for one unit) $3,000 (electric heat).
One unit is rented for $762 per month and the landlord pays the hydro for this unit only. The other units each rent for approx. $700 per month with tenants paying own utilities. Gross annual rent is $34,956, NOI $22,300.
Plan is to keep all tenants, and possibly do upgrades at least to the unit that we're paying hydro (and therefore heat) in, but we would have to see if that's financially advantageous or not.
Any comments on this deal? We have yet to figure out what our starting offer will be, I'm still crunching numbers and seeing how large a % drop in offer the current landlord accepted on his other buildings, etc. Possibly may offer 200K and go from there.