Updated about 5 years ago on . Most recent reply
Thoughts on purchase of first rental property
Hi BiggerPockets
I would like to get opinions on a possible property for sale in San Antonio.
It is a ~1300 spft house, converted into a duplex each unit have 1 bed, 1 bath and each unit has its own livingroom and kitchen. Currently, each unit has a month to month tenant and both occupants have been there for years and years and are currently paying $450/month. Current owner purchased house as a duplex so I suspect no permit issues. There is also a small studio on the back yard that is currently not rented out.
ARV for a house flip is estimated at $258K.
We did go inside one unit and it was really nasty. Walls were there (yeah) but it needs to be torn up down to the studs. I am told the other unit is the same. I am guessing about a $15k-$20k(each unit) to rehab which would bring these units up to about a $750/month rental.
Now, I did not speak with the tenants but I am told there's one tenant that will not move out. My thought here is to buy and start the eviction process when possible. Honestly I don't think these unit should be lived in and should be condemned in my opinion. If this eviction takes a little time I should still have positive case flow (ROI 14%). The plan is to have both units vacated before rehabbing both units. Rehab both and rent out. Then after 4-6 months refinance and get some equity out to recoup investment.
Seller wants $120k and other buyers have offered this but want tenants out before buying. I am thinking about offering less ~$90k(or less) and seller does not have to worry about tenant eviction. The owner is motivated due to illness and still gives him cash after paying off his loan.
Still looking to get my first property.
Any thoughts on this would be greatly appreciated