Hi All,
I just wanted to get a quick read on a scenario and a general opinion if you would do the following deals. I am contemplating on selling two of my properties via a land contract/owner financing. This is purely for analysis sakes and I will not reveal actual addresses but will give as much details as possible. Both properties, I have spent a lot rehabbing and are all up to date on MEP systems, all repairs made, fully occupied with great tenants and pays on time, and absolutely no deferred maintenance. It is truly a turnkey that is ready to be turned over to investors. I have updated these properties to be bright, modern, and comfortable.
Deal 1:
Location: Central Cleveland 44105
Grade: Class C Neighborhood
Property Details: Duplex with 2 bd 1 ba down, 3 bd 1 ba up, and an enclosed 2 car garage
Rents: DN: $750 - UP: $750 Garage: $50 per month to UP tenant ($1550 per month total)
Rehab scope: Spent over $13,000 on rehab to make this place shine. New paint, water tanks, one furnace (other was still working fine), new flooring and carpet throughout, new doors and hardware, fixed all plumbing issues, updated electrical, and new appliances for both units.
Property taxes: $1,100 annual
Utilities: I allot $200 per month, yet to exceed that (Only pay for water and sewer, trash is included in Property Tax)
Maintenance: $100 allotted, yet to exceed ($70 for lawn mowing from Spring to Fall (bi-weekly), and winter up to $100 for snow plow)
Offering: $67,500 (10% down)
Terms: 72 months (30 year Amortized)
Interest: 6.5%
Payments: $1,188.64 per month
Additional Comments: This property gets a ton of interest because it is the nicest and best looking property in that neighborhood. Looks very unique and modern on the outside with updated Vinyl siding and form that sets it apart from typical Cleveland duplexes.
Deal 2:
Location: Maple Heights, OH 44137
Grade: Class C+ Neighborhood (More suburban)
Property Details: Duplex with 2 bd 1 ba down + Den, 3 bd 1 ba up, and plenty of off street parking (honestly you can build another unit on the property, plus two city owned lots on both sides that the city will attached to the property for only $100-150 each, but must be adhered to current parcel and not to be sold separately. I have not done this yet because I do not plan to develop the parcels and do not want to accrue more landscape maintenance cost)
Rents: DN: $900 - UP: $763; both CMHA tenants, DN has been there for two years and CMHA pays the entire amount, UP is an elder woman who pays 50% out of pocket, Section 8 covers rest, and pays on time online, so all payments are automatic each month like clockwork (Total: $1,665)
Rehab scope: Spent over $5,000 on rehab just to satisfy POS inspection which was tedious and nitpicking at the smallest things. Down did not need any work except minor items, UP had all new paint, carpet, appliances, plumbing upgrades, and a few windows. I am actually going to be spending about 1-2k on down unit just to replace her carpet and repaint the place because she is a good tenant.
Property taxes: $2,400 annual (will be appealing this since it is higher than what it should be)
Utilities: I allot $200 per month, yet to exceed that (Only pay for water and sewer, trash is included in Property Tax)
Maintenance: $100 allotted, yet to exceed ($80 for lawn mowing from Spring to Fall (bi-weekly), and winter up to $100 for snow plow)
Offering: $87,500 (20% down)
Terms: 72 months (30 year Amortized)
Interest: 6.5%
Payments: $1,369.63 per month
Additional Comments: This is a very solid property that is brick exterior with tuckpoint done a few years back. It has a lot of potential for more development through acquiring two adjoining parcels. I can already see both tenants staying there for many years to come as long as their Section 8 vouchers continue. Very minimal repairs (We get maybe 1 call every 3-4 months and it is always something minor), absolutely no deferred maintenance.
Once again, would you do these deals on these terms? Of course monthly payments can be lowered with higher down payments.
