Purchasing a Three Family

[Liane Cochrane]

Hello Everyone!

I need opinions.  This is my second purchase of real estate (not including my primary residence), and the first was several years ago and was a vacation rental property, which was sold after a couple of years.  So, this is my first big real estate investment purchase in quite awhile, and I am quite anxious.  Please let me know if you would move forward with this and why and why not.  I appreciate all opinions, so that I can move forward with confidence whether to purchase or not to purchase.

I made an offer on a three-family in North Attleboro, Massachusetts.  Decent market I am very comfortable with.  I live in a town close by, which is great.  There were several offers in on this property, and I offered a few thousand over the asking price of $379,000.  The listing price is a decent asking price for this area.  All units are occupied and have leases, so I am stuck with those leases until they expire.  One expires in February, another in April and the other in July of next year.  The rents being received minus all of the expenses cash flow around $600 per month.  My issues are these:

The current owner has no information about anything on the property including how old the roof is, how old the heating systems are, nothing.  Basically purchasing as is.  They want an inspection done within 10 days or no deal.  They also want me to forego my right to walk away unless the inspector finds more than $5000 worth of issues.  I realize that $5000 is not a lot for a three-family investment, but that coupled wtih no information whatsoever about the property's roof, systems, etc. makes me anxious.

My issues are:

I am taking on existing leases that I cannot change until they end.

I am taking on tenants that I know nothing about and did not screen.

I have no information about the condition of anything, except what I could see during the walk through, and they want to limit my walk-away amount during inspection to anything over $5,000.  Is this reasonable?  Am I being too picky?

The positives are that I like $600 in cash flow, which has been mostly impossible for me to find in Massachusetts for the months that I have been analyzing properties and will probably remain that way for at least the near future.  I like that I don't have to shop for tenants right away but with obvious concerns.  I want to be as smart as I can be, so that I don't destroy my chances of continuing a hopefully long real estate investing future, but also don't want to miss out on a good deal that I may not find again for quite some time.

The information and opinions I find on this site are invaluable to me, so my first instinct was to come on here and find out what you all think.

Would you move forward with the current owner's conditions on my offer, and with the cash flow amount, and with the fact that I am stuck with these tenants for at least a year for one of them?

Thoughts before I move forward?  I am a newbie and appreciate any words of caution to not move forward or encouragement to go for it.

Thank you all so much for being here for us new folks.  I know I will make mistakes, but I don't want to make a huge one as my first purchase.