Looking into a Mixed-use Property

[Zach Hitner]

Well here goes my first post and also my first real inquiry with this amazing community.

My wife and I are looking to begin investing in buy and hold SFH or duplexes in Allentown, PA when I have taken notice to what could potentially be a real deal.

I have seen the property on the MLS before and passed it by because it is out of our budget (we have enough set aside to comfortably take on an $80-90k home or small multi with a bit left over for some cosmetic work and this listing is over $160k). However, the owner of the property I originally brushed off has posted the property to Craigslist and seems highly motivated to sell it. Here's a description of the property:

It is a three parcel listing with two structures on it: a 5/2 home and what used to be a doctor’s office so the property is mixed. It is zoned for MHD residential...I’m not sure how that impacts the properties in any way. The seller has stated that he is willing to both negotiate and finance, so he is extremely motivated to sell (which both excites me and makes me nervous). Looking at rent rates in the area, the 5/2 home could rent for $1300-1350/month and rented for $1250/month in the past (according to the seller while updates were being done to the home). The office should be rentable for $10/sq ft per year and is roughly 1000 sq ft.

The income potential is there for both properties. I have made an initial inquiry with the seller to begin the conversation and see if this is a good opportunity for my wife and I.

What I would love to have help with is determining the best course of action with this. I was thinking utilizing seller financing and also asking for a lower price and being able to put down 5% or so on the property so we have funds to do any repairs or updates the buildings may need. Typically all of those things don’t go hand in hand. My wife and I would like to stay away from hard money and asking family for additional funds since we will be leveraging money already on the property with the financing.

If anyone has advice or suggestions on how to approach this, my wife and I would greatly appreciate it! If you need any hard numbers, please feel free to ask and I will do the best I can to fill those in. Thanks ahead of time everyone!