Deal or no deal on this multi family?

Question

Currently listed at $159,900

6 units bringing in $3,200/month in rents

Taxes are $3,092 and Insurance is approx $1,200. Tenants pay electric and heat and the property has a private well for water.

I would self manage.

Garbage(dumpster on site) and city sewer is $395/mo average

There has been zero vacancy in the last 10 years.

I would offer $150,000 cash sourced from a private money lender at a zero interest rate. Would JV and my partner has the cash. I am a licensed Realtor so would earn 2.1% commission on the buying side.

The building was built in 1900 and needs plenty of updating. I can leave as is and keep getting $3,200/mo in rent or rehab the units one at a time and get $3,800 in rents when they are all complete. Tenants are all employees at a local mega dairy farm and the community its located in is relatively low income and rural.

Lets hear your thoughts on whether or not you would pursue making an offer.

Charles Carillo · Answer

@Brock Agamaite

If there has been not a vacancy in 10 years, the rents are probably (way) under market. Not saying to jack the rents but I bet you can get higher if you rehab the units than just $600/month. On the other hand, a rural location cuts down on the potential renters and if the rent goes up a little you might not be able to re-rent easily. Most tenants having the same employer is risky if that company closes.

Charles Carillo · Answer

@Brock Agamaite

Yes, but it is not industry diversified. There is one major industry. Not saying not to do the deal; but remember certain parts of Florida in 2008 when construction stopped and the job market was not as diversified as it is today or Houston during the oil crisis of 2015-2016.