Where to go with a 4-unit multi-family property (In over my head)

[David Harris]

About four years ago I got a 4-unit property with a FHA 203K loan, I was 26. The goal was to fix it up, live in it and rent the other 3 units out to cover the entire mortgage and have a a slight profit. I was getting the help of my retired uncle, who is one of these old guys that can fix just about anything and was an avid DIYer, in addition to being a retired HVAC installation teacher.

I ended up having to use a contractor for some of the work in order to get a the loan, my thoughts were to use the contractor for just enough so that I could get the property, and do the rest myself, with the help of my uncle (who owns 2 multiunits and his own home).

Fast Forward to today, I am still not finished.  I have one tenant who lived in the building when I purchased it and has been living there for about 13 years.  While I have made substantial improvements to the building (new roof, new plumbing, some new electric).  There is still a lot more that needs to be done.  Plus me and my uncle are constantly arguing, I'm noticing a lot of things he does don't quite make sense, and in a few instances have cost me money because they were flat out wrong.

I know I need to change my approach but I am not sure how.  I have the one tenant, who covers nearly half of the mortgage.  I have a fairly well paying job, but I also have a substantial amount of work left.  My neighborhood is changing rapidly and the median rent is going up, but along with the increase in rents, the quality of available units is also increasing.  One friend/investor recommended just getting out a loan gutting and starting from scratch, my uncle advocates just doing the minimal amount of repairs and getting someone in, even if I am getting way less rent then I can.  I want to do something somewhere in the middle.  I am apprehensive about taking out a sizeable loan (and unsure how and what options there are in the financing department).  I have a decent amount of savings, and I am about 50% finished with one more unit, what I have left is largely cosmetic, sanz some plumbing and electrical work that needs to be done,  I just recently had a new HVAC system installed in this unit.

Not sure what the next steps I should take should be.  I'm definitely rambling a little bit, so I am going to stop now..lol.

Thank you.

[Tom V.]

It sounds like you need to focus on getting the closest unit rent-ready.  

Do the work right the first time.  If you are working full time you should hire in help.  Not your uncle.  Not some guy your uncle knows.  

It sounds like you need to keep investing capital to get your building to full operation.  There's no easy way around that.  Suck it up and spend money smart and market your two vacant units.   

Make a punchlist for what needs to happen and check the boxes.  

To decide whether a big remodel vs. a quick remodel makes sense, you need to provide more #'s about how much each would cost and what the difference in prospective rent would be.  Is this place in a good/middle/poor neighborhood?