All Forum Posts by: Peter Ferre

I am in the inspection stage of buying 3 bed 1 bath/3 bed 2 bath duplex for 575k and know that I do not want to spend more than 650k on this project. I am preparing to counteroffer at a lower price due to the extensive construction needed on this property. Currently, my numbers show that I will need to put 125k into construction to make this property renter ready. However, this 125k includes the cost of adding another bathroom on the 3 bed 1 bath unit (25k). If I am confident that I can either break even or have minimal cash flow by renting the duplex at the current layout (3 bed 1 bath/3 bed 2 bath), should I include the value add bathroom in my construction costs? Meaning, if the value add, would cost 25k, my new construction would total $100k, and I could offer 550k on the property. Or should I still include the value add costs of 25k and not offer more than 525k. 

I am looking at an 8-unit apartment complex right next to a major University that is cash flow positive. However, it does not meet the 1% rule, with it being at .81%. How much should I weigh the property not meeting the 1% investment rule? Are there any other factors you recommend for me to look at to determine whether I should invest in this property?