Did I Analyze this Property Correctly?

Question

Hello, my name is David and I am new to Real Estate Investing. I've watched many of Brandon Turner's videos and I am very inspired. I am 18 years old and currently live in Vermont but I want to start investing in property in about a year. I am trying to analyze the market and see which state has the best opportunity for me at such a young age. Whichever state that is I will move there but Vermont isn't it!

I was wondering if I properly analyzed this property listing. If I did, this looks like a steal. This property is located in Aiken, SC and is a 4 unit multifamily home (2 bed, 2 bath). The current owner is renting out each unit for $425 but I believe with $10,000 in repairs I could easily rent each unit for $500. Is this reasonable? From the Rental Property Calculator I am getting about 27.66% Cash-on-Cash ROI, which is above average. The listing didn't show the tax information from 2016 so I assumed around $2,000.

I hope someone can analyze this property and see if they too are getting the same results. If not, would you potentially be able to point out my error?

Thanks to everyone!

Laura Tokgozoglu · Answer

I live in Aiken and I agree with what others have brought up. The first thing that was a red flag to me was that this property had been on the market for over a year...if it was a good deal I would think that some savvy investor would have scooped it up. And the As Is was also worrysome. It is as others have noted pretty far out of town. My husband and I are just getting started in investing, but we are focusing our attention elsewhere, not really in Aiken. We bought a condo in Lynchburg Va and will most likely buy another one there this year...we want to rent to Liberty University students. Liberty is a Christian University, and not a party place at all, so that is one of the reasons we are focusing there. And Liberty is growing every year, so the need for off campus housing is pretty strong. We also are going to start looking at Grovetown GA which is near Fort Gordon military base and there  is some growth going on around there and some pretty affordable houses for sale. Good luck with your endeavors! I wish I had started when I was 18! I am 58 now! Better late than never!

Laura T.

David Ross II · Answer

All I can say is wow. This community on BiggerPockets is truly amazing, thanks to everyone for the fast replies! I believe the largest advice that I've gained was to make sure there are always more pictures on a home, especially one that has been sitting for a while and selling "as is." I've also learned that the repair budget should always be higher than expected so there is padding for any unpleasant suprises.

Thanks everyone to the amazing support and advice! I look forward to posting on BiggerPockets and I can't wait to get started as a real estate investor!

Stephanie Ferrante · Answer

Hey David,

I am an investor in Aiken, SC.  Property is a bit outside of the city so no telling what the area is like. Plus with the lack of pictures I think it is hard to say what repairs are needed.  Send me a PM and perhaps I can lend some assistance.

All the best,

Stephanie

Troy Zimmerman · Answer

David

Also, always make sure to check the county website for tax info.  SC has a homestead exemption.  It sounds like this doesn't apply to the property since it has previously been used as a rental, but always verify!

Tyler Vinsand · Answer

@David Ross II Have you contacted the seller about the property? Considering that there are no pictures of the interior, it is being sold "as is", and it has been on the market for over a year, that screams red flag to me. $10,000 of repairs might be an extremely optimistic estimate for repairs. But, I could be completely wrong. You won't know for sure until you have the home inspected.

Ann Bellamy · Answer

I did not analyze the numbers, but the property appears to be outside of Aiken, maybe in Aiken county, but not in the City itself.  Also, there must be a reason it's been on the market for over a year.  I know a little bit about Aiken, just enough to be dangerous.  Suggest you contact other investors who are in that market and temper your enthusiasm a little.