First Multi Family Purchase and struggling

[Amanda Sokol]

I am hoping someone can offer me some guidance. Any advise is greatly appreciated! 

I purchased a quadplex at sheriff sale for $51,000. It is in rough shape-tree growing through the middle, needs new roof, termite damaged sill plate, oil tank (already had removed), needs all new plumbing and electric, 4 new huge decks, 4 kitchens and baths...basically it needs to become a new house lol. The roof has two slight pitches in it. So far I can only find roofers who will be membrane roof ($16,000) with a 20 year warranty. I have done small rehabs, but nothing even close to this beast of a project. I decided to hire a contractor and the one bid I received so far is way over what I wanted to spend. Some things I can save on are painting myself and coming up with another solution for the decks. The estimate I received for the decks was $64,000 🙁.

The land itself is worth anywhere from $175,000-$200,000 without a structure. A quad in the neighborhood would probably sell for $500,000 to $550,000. My plan is to hold onto it long term for rental income. 

Here is some info:

4, 1 bedroom units

Each unit is 750 sq/ft

$900-$1000/month rent per unit

Purchase price $51,000 (paid cash)

$9800/yr taxes

Using construction loan for rehab-can borrow 80% of after built appraised value

I am painting the siding 

My questions are

-what are some options other than mini splits? Eating up a huge chunk of my budget. Window units are looking real great right now!

-do I push to save the decks and try and reinforce them?

-how do I come up with a rehab number that makes sense based off the potential rental income?

- at what point do I say this just isn't worth it...knock it down! Everyone tells me I won't be able to get a quadplex approved since it was grandfathered in. But I could do a duplex. 

Enjoy these lovely photos. Yes I went in the crawl space and yes it was terrifying! 

Thank you!!!

Amanda

[Joseph McGranaghan]

Nice score Amanda! In my opinion you didn't get hurt at all with this purchase based on the numbers you posted. I am a contractor in New Hampshire so I cant speak specifically to your city or state but what I can suggest is before spending a dime in rehab money check with your city building codes department and see exactly whats allowed. This will tell you weather you can tear it down and rebuild it as is or you may have to leave a part of the existing structure to be able to keep it a fourplex. The city kind of controls your next move here. Even if they only let you put a duplex back on the property, and it cash flows for you, sometimes new construction cost are less expensive than rehab cost. I met a investor from CT who was tearing down homes and putting prefabbed modular homes on the existing foundation. You can get them designed any shape and size you want now, may be you can even get a duplex, I've never looked into it. Good luck!

Joe