106 year-old, five-unit in NJ should I pass?

[Marco Y.]

Hello everyone,

I'm gonna try my best to explain my situation for anyone that wants to help. Im 25 years old and have loved real estate probably since I was 14. Although I've been reading and learning everything I can about the real estate world I feel that I have long ways to go.  

I recently got in contact with an owner who wants to sell his 106 year-old  5 unit in New (North) Jersey. The 3 story house has 1-2 bedroom and 4-1 bedroom. The 2 bed rents for $980 and all the 1 beds rent for $795 except one which is at $700. The GOI for the year is $48,780.

Taxes: $8500

Insurance: $3,200

Pest control: $300

water/sewer: $2500 

general electric: $400

Maintenance; $2000

GOE: $16,900

The owner was asking 400k but I got him down to 375K. Would this be a deal any of you guys would do? I know the building is old and it may need some capex in the future but after inspecting it twice with my father who's a contractor (semi-retired) we didnt find any serious issues. Also in this town almost all the properties were built in the early 1900's so its nothing out of the ordinary. What else would be necessary to know before I sign the contract? Also I checked any liens or taxes owed with the town and it was all clear.

Any feedback is greatly appreciated and probably desperately needed thank you all.

[Scott Ellis]

Not a deal breaker, but I'd definitely scope the sewer if you end up making an offer.  Around that age, things start collapsing or shifting and that could be a 20-30K repair which, in my opinion, doesn't add much value.

Otherwise, it seems like a good deal.  I'm closing on a 1905 triplex right now.  I was nervous, but then spent a weekend in Concord, Mass, staying in homes from the 17-1800s.  That changed my perspective a little.  And it sounds like similar to your town, that building's age is the norm and the young professionals aren't racing to live in the cookie cutter homes 20 minutes of town.  These older homes can still be great investments.