Should I overpay Or back out??

Question

I’m under contract for a triplex that needs 10-15k more Reno than i budgeted, it should still cash flow 2-300 a month.  BUT…. It is a double lot that I can build a 2-4 unit on in a decent area.

Matthew Kwan · Answer

I mean if you have the liquidity of cash and $10k-15k cant even rehab a full unit now with the labor and materials all soaring...I would go for it! Especially acquiring a multi family is a prime state is no easy task boss.

@Carlos Valencia @Albert Bui

Devin James · Answer

Hey Matt Allen,

In 5-10 years would you care about the extra $15K? Or would you be glad that you own the asset? If the extra $15K doesn't hurt you too much, & the property is in an appreciating area, i'd go for it.

Matt Allen · Answer

I Budgeted 40k it's coming in around 50-55k

Nathan Harden · Answer

Take it while you can. Think of it in the long term, is that extra $15k today, going to really matter to you in 10, 15 years down the road when you're rents are higher, built a couple more income producing properties out of it and increased the worth of the property? And the more you do this, the more you will understand that major rehab bids are almost always going to have some type of change order.

Jaron Walling · Answer

@Matt Allen Unless the location is questionable, property is a disaster (rehab nightmare), or you can't swing the $15k... I'd BUY. Trim the fat off the rehab were you can and you'll be fine.

Jaron Walling · Answer

@Matt Allen C class neighborhood with investor activity dragging up values??

That's not that bad man. We rehabbed a SFH late last year and went over $5K on an original estimate of $20K. 3X that mistake and you're around the same amount for a tri-plex. There's always rehab surprises. For us it was replacing the roof. We assumed we could patch/repair the leaks, but after a few quotes it made no sense to Band-Aid it.

Matt Allen · Answer

The location is ok, its a historic property with 20+ years of deferred maintenance.

Jeremy Horton · Answer

Just get started and do it - you'll learn along the way, you can refi later if need be, and you still have cashflow.

Just don't go "underwater" on the property too much

Should I overpay Or back out??

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