Buying House Next door

[Nicolas Yopp]

This will be my first investment property.

This just was posted for sale and my wife and I have always talked about the potential to buy this house. This house is currently a rental and has been for the last 10-15 (maybe more) years I believe and it needs quite a bit of work. New windows, doors, siding, the roof is metal so can paint it, and new everything for the interior. My thinking with this is there's an opportunity to build an garage ADU in the rear of the property which we can build first, get someone in there while the same rental is stays at the house if he wants to stay. Then remodel and/or add-on for the main house. While we are not quite ready to buy it, but the opportunity is now there. I'm a design - builder, so I can design the ADU and the renovation of the house. Don't think I'll have as much free time to build it myself, so I'll have to ask around who can help.

I think their asking price of $189k is quite high based on the shape the house is in and it's only 500 sq.ft. Currently has 1 bedroom and bath. I was thinking of perhaps offering at $150k? There was a house similar size 2 years ago opposite from our house which was sold for $157k and it was in a bit better shape. He has since fixed it up quite nicely. We only have about $15k cash available right now, and in order to buy an investment property you need 20% is that correct? Which is $30k and that's something we don't have on hand.

ADU will be about 700 sqft 1 bed / bath - about $1,000 - $1,200 a month. The house can add new bedroom maybe bath? So 2 bed / 1.5(or 2) bath? - $1,200 - $1,500 monthly?

Here's my math if I did it correctly. I'm guessing the garage ADU will be about $100-130k to build it, then the house maybe $80kish including adding a new garage at the house. How hard would it be to get a construction loan and or hard money lender for both the ADU and house.

The total loans of about $350,000 without down payment. In the end after both are completed with the build, it will be roughly $800 cash flow after expenses paid for that is if I did my math right.

Any hard money lender we should look into in the Central Oregon area that would be willing to help first time investor?