2 Year Resale on 3 Unit?

Question

Good Evening all!

Wanted to discuss a property I took a look at today. Going in, I wasn't dying to buy this place. My goal was to get a better understanding of what is on sale in the market from a small multi standpoint and get a better idea of what the "quality standard" is for units to compare with my own property.

Doing a very quick walk I could tell that there is a lot of work that needs to get done (3 heating system replacements, a leaking water heater, potential foundation issues, new roof needed, etc., etc.) Doing an extremely quick comp lookup it is definitely priced below the market.

When I took a look at the tax assessors office, I saw that the property was purchased less than 2 years ago for only $50k less than what it is being listed as.

My question is with it being owned for less than 2 years and the seller only asking for $50k more, is that a red flag or am I overthinking the situation?

Appreciate any help in advance!

Andrew Casal · Answer

@Andy Tomaswick thanks for your thoughts! As mentioned I was looking more to see what is out there as opposed to going into acquisition mode.

Still being "green" not sure when to be paranoid and when I'm actually seeing pot of gold at the end of the rainbow.

Andy Tomaswick · Answer

It certainly sounds like the current own is making an appreciation play, which in itself isn't necessarily bad.  If the numbers still make sense after accounting for all the deferred maintenance it could still be a good deal, so I won't call it a red flag.  But I would certainly pay close attention to any disclosures if you put an offer in to make sure you would truly understand what you're getting into.

That being said, you didn't seem particularly interested in it in the first place, so maybe it's better to pass on this one if the numbers aren't really really good.