All Forum Posts by: Brett Wagner

So, I've been working on saving for an investment property (1st one) and along comes an opportunity to buy an apartment building (6 units; $130k). It needs a lot of work, but it is fully occupied with long-term tenants because the rent is so low. The owner told me he has not done much to maintain the place hence the rents being so low. So as I'm mulling over whether to go for it, it dawns on me: I could sell my house, take the equity and buy a nicer apartment building which creates more NOI and /or one that is better managed. This would obviously give me a big boost in my cash to get going in REI.

But being a rookie (and having a family of 6), maybe going a little smaller might be better?

What do you think?

So I've made a few offers on single family and small multifamily and as I was looking at another, the owner pulls up to the house and we got to talking.  He had 2 other properties and since I was looking at this one as an investment, he tells me about this apartment building he wants to sell. For what it's worth, I've never been a landlord.

Details:

6 unit apartment building

fully occupied with 5 of 6 tenants being there 10+ years

owner admitted to not really taking care of the place except in "really bad" situations.

hasn't raised the rent in 12 years (tenants are paying $300-$500 PER MONTH less than comparable apartments in area)

Tenants pay electric. Owner pays water.

Believe it or not taxes are $1100/year.  I triple checked.  That's $1,100 per year.

Asking $130,000.  yes that's correct also.

Monthly income $2200

water bill approx. $200/mo

Any words of advice/caution would be appreciated.

@Jon Crosby

Thanks Jon and yeah, I’ll know the exact number from my lender hopefully tomorrow and if it looks good I’ll put an offer in sometime soon. The property is listed at 279k. I’ll probably raise the rent on the tenant between $50-100/month but I’ll also have to have her sign a 1year lease bc the lenders want something more permanent in place (like 15 years at the same place isn’t enough?).

I’m glad there haven’t been many (any?) offers on the place and I’m not emotionally tied to getting it so if it doesn’t happen, then nothings lost.

I appreciate your feedback.

Would really love some advice on this unique possibility (sorry it’s long, wanted to include all the details):

A property (3,000sqft.3/2) has been on the market for about 5 months that I personally love. It sits on 5 acres and has a 2 bedroom/1 bath house as well that has been rented out to the same tenant for the last 15 years (longer than the current owners have been there). The rent has never been changed, unfortunately, and sits at $500/month (currently month to month contract).

Here's what I would like to do. I have a big family and would love a few acres for the kiddos to explore. Because of the way the land is configured, I could see myself adding another house or 2 (or duplexes?) on the property over the next several years. I would need to bring the current tenants rent up to about $700 or $750 but would probably do that over 2 or 3 years time.

I could sell my current house @ approx. $110k, and take the approx. $54k profit (after paying off the mortgage) and roll that into the buying of this new property. That plus the rent from the 2/1 would help pay for the mortgage of the new place.

OR

I could rent my current place out, but it would not cash flow and with expenses and capex would actually lose money for a little while. I have approximately 7 years left till its free and clear.

OR

I could refinance my current place, then rent it out. Because of a smaller mortgage payment, I would cash flow approximately $200-$300/ month.  This would be my preferred option  

Man this is a long post. If you made it to the end and still have energy to give me some advice... big thanks.

@Matthew Phelps

Welcome Matthew.  Good to have you join us East Texans.  There's quite a few people on this thread that would be great resources for you.  I am a Professional Home Inspector so if there's anything I can do for you, feel free to reach out.  

Blessings.

Here's  a unique situation I'd love some help on.  Let me know what you think!

A property (3,000sqft.3/2) has been on the market for about 5 months that I personally love.  It sits on 5 acres and has a 2 bedroom/1 bath house as well that has been rented out to the same tenant for the last 15 years (longer than the current owners have been there).  The rent has never been changed, unfortunately, and sits at $500/month (currently month to month contract).

Here's what I would like to do.  I have a big family and would love a few acres for the kiddos to explore.  Because of the way the land is configured, I could see myself adding another house or 2 (or duplexes?) on the property over the next several years.  I would need to bring the current tenants rent up to 2019 but would probably do that over 2 or 3 years time.

I could sell my current house @ approx. $110k, and take the approx. $54k profit (after paying off the mortgage) and roll that into the buying of this new property.  That plus the rent from the 2/1 would help pay for the mortgage of the new place.

OR

I could rent my current place out, but it would not cash flow and with expenses and capex would actually lose money for a little while.  I have approximately 7 years left till its free and clear.

OR

I could refinance my current place, then rent it out.  Because of a smaller mortgage payment, I would cash flow approximately $200-$300/ month.

Man this is a long post.  If you made it to the end and still have energy to give me some advice... big thanks.

Thanks for the reply @Charles Kao

Not totally sure about the rehab but a very rough estimate is 15-20k. 

What other info would you like to know?

3 units on 3 acres. For all 3, $115,000

2 mobile homes

1 SF

Both mobile homes are owner-financed:

Unit 1 $800/mo. till 2024

Unit 2 $612.91/mo till 2031

The single family home has been gutted and is not livable.

The ARV of the SF is approx. $115,000.

I’ll put down 20%. Currently the occupants of the mobile homes are paying for all expenses due to being owner-financed. I estimate my cash flow to be roughly $350-$400/month. This of course would only be for 5 years as unit 1 would then be in occupants possession.

I would do most of the work on the SF to get it rentable or flip it within that 5 year period.

What do you guys think?

@Brent Coombs

What do you mean by "astute enough" to refinance and get my money back? Doesn't everyone BRRRR?! Ha

@Sam Shueh

Thanks Sam. That’s super helpful in defining exactly what kind of neighborhood it’s in. Grading neighborhoods has always seemed so subjective and cloudy to me.