Boarding House Investment

[Zachary Brown]

Hello everyone -- this is my first post here on the BP site.

My partner and I are looking into purchasing a boarding house and I wanted to see if anyone else would offer their opinion. The home is located among multi-family properties.

As of right now the property consists of:

• 1st floor is a (3) bedroom apartment leased on a yearly basis for $1,500 per year (going up to $1,700 per year at the end of the month). Has (1) full bath and a full kitchen.
• 2nd and 3rd floors have (8) licensed rooms and (2) non-licensed rooms rented out for an average of $170 per week on a weekly basis.
• 2nd floor - (2) rooms have (1) private bath each. Floor also contains (1) full shared common bath.
• 3rd floor has (2) common baths - (1) Full and (1) Half
• 2nd and 3rd floors have no kitchen or kitchen access.
• Onsite coin operated laundry 
• Parking fee charged for using paved parking the back

I have done the proforma excluding the non-licensed rooms and and came out with COCR of around 15%.

Also ran the numbers excluding the non-licensed rooms and came out with a purchase price of around $360,000 @ 11% cap rate.

The home is in decent shape but will need to be updated and repaired in the future. We estimated the costs conservatively of these repairs to be around $32,000 or 2 years of NOI after debt service.

There is opportunity to add value to the property by increasing the rents or pssibly converting the property from a boarding house to a multi-family property in the future. This could be accomplished by moving from a Class C tenant to a class B tenant.

I can provide more info.

Thanks for you help!