Investor · Simpsonville, SC · Member since 2015 · 132 posts · 54 votes
I've just found a deal on a 4 plex, unfortunately I haven't seen any photos or the property yet, and won't be able to until this weekend, and am waiting to hear back from the realtor. It's in a great location, next to a park and popular businesses, and I could easily rent each unit out for $500-$650 after the rehab.
It was built in 1980 and has been vacant for a couple years boarded up and everything, so it'll be a total renovation for the most part.
For all of you experts that have experience with 4 plexes, what do you think would be a realistic budget assuming I'd have to gut out all 4 units and rehab? Each unit is 2 bed 1 bath and the utilities are separate for each.
I'd guess that it'd take roughly $8-10k per unit, so roughly $40k overall and add a cushion of $50k for overages and a few things that'll need to be done outside. I'll be able to do a lot of the demo myself with some cheap labor, but don't want to factor that into my budget. Sorry I know there's not a lot of details but this is all I got for now! Once I get some information from the realtor I'll post more.
Why has it been vacant so long and boarded up? Vandalized in any way? How is the neighborhood? Might need all new wiring, all new plumbing, appliances, fixtures, doors, windows, etc if someone has stripped it. After you've seen it and have taken notes, check out the materials @J Scott has written for estimating rehab costs.
$125k, but I'm sure they'll go lower. In the market the property is in, very few multi-family properties get listed, and they go for a premium. Even if I got it for the list price and had to put $50k in, I'd still be able to cash flow nicely and have substantial equity.
Why has it been vacant so long and boarded up? Vandalized in any way? How is the neighborhood? Might need all new wiring, all new plumbing, appliances, fixtures, doors, windows, etc if someone has stripped it. After you've seen it and have taken notes, check out the materials @J Scott has written for estimating rehab costs.
Please be sure that the comps support the cost plus the rehab. The ARV of the properties sold in the area must be at least 50% higher than the asking price in my estimation. It may cashflow well, but you will never be able to sell it profitably if your purchase plus rehab costs are greater than current comps.
Please be sure that the comps support the cost plus the rehab. The ARV of the properties sold in the area must be at least 50% higher than the asking price in my estimation. It may cashflow well, but you will never be able to sell it profitably if your purchase plus rehab costs are greater than current comps.
The comps support an ARV price easily over 50% higher of the current list price, it'll even push upwards towards twice the list price.
I would think you're reno budget is probably a little on the low side especially if your talking hiring out all of the work to contractors. Of course if you are putting in some work yourself, depending on your skill level you could drop that number drastically... though then you aren't accounting for paying yourself anything of course, which is what I tend to do to make the numbers work better in my favor, totally guilty on that one!
You should post your estimated rehab costs broken down into specific areas with estimated numbers to them and that would give everyone, including yourself a better idea as to if where your numbers really should be. In my experience looking at 1970s-80s 4-plexes which are very common in my area, I've been at the 10k mark per unit for renovations easily with properties that aren't in total disrepair so I'd think you should be closer to 15-20k per unit if you're assuming worst case. Post some updates as you find out more about the property.
I did a 4plex a few years ago and we came in right about $7500 a unit. We did 90% of the work ourselves and that also included new windows, new decks and stairs. They were 2 bd 1 bth, I figured we saved close to 20k in labor costs.