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Updated over 2 years ago, 06/02/2022
Need advice on whether to purchase a 5 plex
I am looking at buying a 5 plex in a very small town. It is about 15 min in between two other towns that have a population of 4000 and 8000. They are asking 100000 for it and it gross rents equal about 2250 a month. The owners are open to negotiation on the price. The problems with the unit is that there are several water leaks and it looks like the whole roof will need to be replaced and the total cost of that along with other repairs would be closer to 35000. If the unit was full fixed up, it would only be worth around 120000 probably so there is not much place for building equity into it. If i could get the price down to 70000 then i would be all in for around 110000, but even in future i don't see this place increasing in value much. It would cash flow though between 700 to 1000 per month. My question is, is it worth it to buy an older 5 plex that wont really increase in value in a small town but it will cash flow (at least it does right now) or because it will probably never gain much equity and will continue to need repairs, should i pass on it?
Any thoughts are welcome.