5 unit rehab

[Bryan Ellis]

OK, still trying to get a handle on this here but I've got the next possibility. This one isn't under contract yet but here is how it looks.

Purchase price is 45K
Rehab needed is 40K

5 units
projected rent (Section 8) at 525/unit or 2625/mo for 31,500/yr. separately metered for heat/electric-city trash/water/sewer is $120/quarterly. Property also has a 2 unit garage in the rear that also needs repairs (undetermined amount at this time) that rent in the area for 100-150/mo.

So I think the questions are: Can you do a hard money rehab loan on a 5 unit easier than on a SFR? How much cash should I expect to put into this. Assuming we're talking 85K for purchase rehab and that I get the price down to 40 so that covers the closing as well.

If I figure the net income at 16,665/year (gross-5% vacancy-10%short term maint-10% long term maint-8% management fee-sewer/water/trash-taxes) then the ARV of the property should be in the 166,000 range. So I'm at 55% LTV on the ARV here from what I can see. Am I in the ballpark on this one or am I way off again?

[Peter Giardini]

In a situation with a 5 unit... I would not trust the real estate agent any further then I could toss them.

While you may think that spending $9K per unit will get the job done, that figure may only get each unit ready... but neglects the roof, four outside walls, common areas, electrical and sewer.

All big items and potentially very costly. Nothing like a SFR.

Ask me how I know this! My first 5 unit rehab was only supposed to cost me $65K. When we passed $100K I knew we were being taught a very, very valuable and expensive set of lessons.

Best of luck!