Nasty Turnkey looking to purchase then fix
I found a duplex with tenants currently living in it which needs a lot of work. One unit is ok and looks to have minor repairs needed to be done. The other unit is downright disgusting with carpet which was peed on by the pet, holes in the wood panel walls, mildew and mold all around the bathroom, and a general bad vibe from just walking around the place. I was looking to purchase this property with a conventional loan, then rehab it. I feel like I am way too excited to call myself a real estate investor to think clearly about this deal. Do you think this is a good purchase or no?
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Hey Kwadwo,
I would have a few contractors walk the property with you, and give you estimates for repairs... even at that, there is always something that cannot be seen until you get into things. Not trying to scare you, just make you aware that you always want to budget a bit extra for unknowns that hopefully won’t be there.
Also, given the condition of the property, it may be difficult to fund with conventional financing. You may have to turn to hard money, so be sure to factor in those costs as well.
Lastly, please make sure to run comps on the property for recently sold, similar properties in the immediate area to determine the after repair value (ARV)... you don't want to be paying too much for the property just basing value on the rents and not be able to sell them in the future and get out whole if need be if you paid more than they are worth.
Again, not trying to scare you, just watching your back. All the rehabs I have completed with my team have been top to bottom projects that most investors wouldn’t touch, but turned out to be diamonds in the rough... as long as the numbers work, don’t be afraid of a little grunge and hard work.
Last pointer, it is always best to get contractors local to your area that are familiar with the township codes regulations, as some are lenient, and others crazy stringent.
Hope that helps!... best of luck on the project and go get ‘em!...😊