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Updated almost 4 years ago on . Most recent reply
potential rental property
I'm looking at a triplex in a touristy town. each unit is 1 br and 1 bath. 2 units have tenants. The units are liveable but not nice and rent is 550 a month. building is over 100 years old and may need some work, possibly roof and electrical. No units have washer and dryer. But the location is very desirable, a quiet street with many nice homes all as old walking distance to the town center, which brings in a lot of tourists. The asking price is 139,000 but when i ran it through the calculator the cash flow is only $22 a month due to estimated variable costs which i put in at mid range eg 10%. Does this seem correct? It doesn't really take into account the work that would need to be done to make each unit nice. I estimate 50K depending on roof condition. I would not have to rehab the two units that are leased right away, they signed lease knowing what they were like. I was thinking to turn 3rd unit into airbnb, calculator estimates 109 a night, 21,000 cash flow a year based on 57% occupancy. Most single family homes in town that have been updated or rehabbed are quite pricy, in the 250,000-300,000 range for under 1200 sf. So, according to 70% rule I shouldn't pay more than 50K for the property. Can anyone see a reason why I should continue to evaluate this property? It seems I would make decent cash flow if I used one unit as vacation rental, so perhaps that alone is worth it, and keep other 2 units as long term. Also there are extremely few long term rentals in this part of town.