Deal or No Deal?
New investor here! I chose Tulsa, OK as my location but I am actually located in a rural part of North Central Oklahoma. Houses sell relatively quickly and rentals are rented before they hit the market.
With that being said....I have the opportunity to purchase a residential home (in decent condition.. Needs a few repairs, but definitely inhabitable) with a small 6 unit in the back. The 6 unit has not been occupied in several years and contains 6 small rooms (200sq ft.. Small living area.. Small bathroom). It, needless to say, needs quite a bit of work. I would be financing the residential property and the six unit would be deeded over upon closing. The seller is asking $205,000...I have a deal accepted for $150,000. Seller is paying $5,000 of closing costs and a $5000 credit towards a contractor for repairs found during inspection.
Here is the part that is bothering me... Property taxes and insurance. Insurance quotes are coming in anywhere from 3500 to 4500 per Year and interest rates are sitting @%7.1. This would put my conventional mortgage at 15-1600 a month with unknown costs for repairs to get the 6 unit functioning.
There have also been rumors of a major plumbing issue in the 6 unit. (Luxuries of a small town.. Everyone knows something). I have a plumber coming out to run a camera through the lines.. But the inspection and plumber are going to cost roughly $1500 before I even get to appraisal.
Does anyone have any thoughts? Good deal.. Bad? Too many red flags?