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Updated about 5 years ago, 12/08/2019

User Stats

53
Posts
21
Votes
Kavin Kuykendall
  • Rental Property Investor
  • Panama City
21
Votes |
53
Posts

What're your thoughts on this interesting prospect?

Kavin Kuykendall
  • Rental Property Investor
  • Panama City
Posted

Hello BP,

I've found an interesting deal in my hometown of Waitsburg, Wa. which I would love your advice on. Please bear with me as I just stumbled on this last night and am still learning about the property myself. This will probably be long-winded to give you all some history and market context:

I met an older couple (mid-70s) last summer at a church hosted drive-in movie. I talked with him for an hour or so and learned they own a 5 unit property in Waitsburg and were looking for a tenant for one of the units.

Well, just last night I learned they are selling. I spoke with him on the phone and set up a time to look at the property on Sunday at which point I will learn more about the property. Here's what I know now:

The asset:

They bought the property 15 years ago as a hotel, but instead of using it as such he converted it into 5 apartments:

It's a solid cinderblock building.

3 bed/1bath X3

2 bed/1bath X2

Each unit is currently occupied.

They each have a full kitchen, and their own washer and dryer, and a living room.

None of the units are separately metered.

They have window A/C units and baseboard heaters in the bedrooms, and Cadet 4000's in the living rooms.

I haven't yet seen the interior but it has a newer roof (~6 years), and new paint.

His numbers given over the phone:

Income:

$900 for each 3 bed

$850 for each 2 bed

$575 per month electric

$525 per month water/sewer/garbage

$200 insurance

$150/month taxes

$150/month maintenance

They own the property outright and are asking $255,000. They are flexible and willing to carry.

The market:

He says he never struggles to keep it rented (of course) and it cash flows well. My biggest fear is the neighborhood. Waitsburg is a cute, relatively safe community with a population of ~2000 consisting mostly of farmers, teachers, and office workers. There is a great high school and middle school, a general store, gas station, and a few restaurants. Walla Walla (20 miles south) is a booming market with a growing population of ~32000 with constant new construction and a few colleges. There is also a new pulp mill going in ~20 miles north which will employ several hundred people. There are no similar properties in Waitsburg to run comps on. In Walla Walla, $255k would probably be the going market value for a similar asset.

Summary: This would be my first deal. So what should I be focusing on asking this guy when I meet with him, discuss terms, and view the property? What should I look for, watch out for, and be aware of? Are there any red flags that my untrained eyes (and ears) are missing?

I know this is a lot of jumbled information, so thank you for your patience.

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