All Forum Posts by: John Dillon

@Kyle Penland  Thanks for the suggestion.  We might go that route.

@Brent Coombs  Thanks for the detailed response. I'm very familiar with the rental stats for the area and it's definitely possible to get better tenants at higher rents.  We will either do what Kyle suggested or reduce our offer price to about $75-80K.  We're still in a contingency period, so we can walk away with no financial loss.

Hey everybody! I'm new to BP and wanted your input on a property.

• Built in 1904
• Triplex with two 3BD /1BA units and one 3BD /1.5BA
• Currently leasing at $600, $700 & $800 mo with long term tenants
• Landlord pays trash/water; all other utilities in tenants' names

Financials

• Under contract for $102,500
• Approx $40K in deferred maintenance & updates.
  • 3 x HVAC systems replaced @ $5K each = $15K (does not need to be done immediately, units could be serviced in the meantime and replaced in a few years)
  • Reno of All Unit Interiors @ $3K/unit x 3 = $9K
  • New windows and doors: $300 x 30 = $9K
  • Exterior minor lead abatement, gutter replacement, porch and pier repair: $4K
  • Contingency = $2K
• After improvements, market rents of $850/mo.
• Gross Income : $30,600
• NOI (50% rule): $15,300
• ARV: ~$130K
• Cap Rate : 11.76%

Other

• The unit is in a good area of town.
• All tenants are month-to-month. I would ask two to vacate. Only one tenant has a written lease with a security deposit.  Current owners will provide a letter describing the lease situation for the tenants with the verbal lease.
• This would be my first purchase.

The prospect of vacating two tenants and all of the work is a bit intimidating! What would you do?