Hi guys, this is my first time posting. I'm new to investing and I plan on buying and holding asap. I came across an apartment complex for $12,000 for 10 units. I believe I can negotiate the price down. But rehabbing cost's will be apx. $90,000. Is this worth it for a first time investor? What are ways to finance for rehab costs? Here's the info: (I copied and pasted)
10 units
2bed/1ba
- Full rehab need so be prepared for work but it's has great rental potential
-Section 8 will bring 650 a unit, will bring in 6500 a month and 78,000 a year
-I have a contractor that can completely rehab them for 9k a unit.
- 90,000 in repair, but you will be getting a practically brand new 10 unit apartment for a little over 100k with an annual cash flow of 78,000. Your investment will pay for itself in 2 years
With building that sells for $12k for 10 units, likely need gut rehab. You should get your own inspectors/contractors to estimate. What about HVAC systems, water heater, roof, siding, electric, windows, etc.? I assume 90k is for rehab interior of the units.
The location of the building is likely not good. Is it in warzone?
If the location is C, make offer to lock up the property (that you can easily walk away with minimal loss) and then get contractors to estimate.
With building that sells for $12k for 10 units, likely need gut rehab. You should get your own inspectors/contractors to estimate. What about HVAC systems, water heater, roof, siding, electric, windows, etc.? I assume 90k is for rehab interior of the units.
The location of the building is likely not good. Is it in warzone?
If the location is C, make offer to lock up the property (that you can easily walk away with minimal loss) and then get contractors to estimate.
@Julia Maddox Welcome to BP. Spending 10x on rehab compared to PP would be way too risky for me. Real estate investing can be risky even when you are staying within the lines-things can go awry.
Good properties in great neighborhoods will make you money without potentially losing your shirt in the process. All the best!
Hi and welcome to BP! I don't know what your market is like, but $12k for 10 units sounds absurdly low, so I'd be very diligent with inspections, planning, etc. My first purchase was 6 units which I put in cash and then worked to refinance, but most banks I talked to wanted a year of seasoning...there are different banks/bridge loans I could have investigated to change that, but what I'm getting at is make sure you have a solid plan for financing/re-financing in place so you don't hose yourself with a bank saying we'll only refi on LTC not LTV.
And like @EdwardLiu said, never believe the seller.