Would you purchase this?

[Brian Ellis]

My location is very difficult to invest.

1. It is a tenant friendly state

2. It’s very expensive

3. Returns are minimal


so now that you guys know that, I have a question for the experienced investor. I’ve been doing this for 5 years now and have a total of 5 units. But scaling has been incredibly tough. Now I’m looking to get into commercial 5+ units. I feel it is a safer investment going into this volatile market. With rates increasing, but rent prices stabilized, I feel it is a better avenue to pursue.  

The deal in question;

5 unit 385k purchase price 

20% coc with a purchase cap rate of 8.5% with one unit vacant.

ARV roughly 500k and it needs about 65k in work.

The problem: the property was built in 1800. It is in historic and requires special permitting for renovation. But otherwise Is In fair shape. These buildings built back then were pretty solid. 

Would you pass on the age of the home? I know homeowners insurance will be high. And it may steer away future buyers.

[Patrick Drury]

@Brian Ellis
Seems like a good deal. Just factor in how much the permits will cost and if there will be any additional costs since you said it requires special permitting. I wouldn't be concerned by the age of the home. In Columbus and Cleveland, practically everything was built in 1920-1940 and the more historic stuff was built in the 1800s. If the numbers work go for it.