Purchasing a 20 unit former hotel

[Kyle Pepple]

I really want to purchase this 20 unit apartment building. It’s in a small town a half hour away from me. It’s so tempting because the seller is financing a huge portion of it. 25,000 down with a 475,000 purchase price, he would finance at 7% on a long term note. This would be great for me because I haven’t had a chance to build up a long credit history yet and couldn’t get a loan from a bank for that amount.

The building has 1,2, and 3 bedroom units. The 3 beds rent for 650 a month and the 1 beds go for 450

I have a few reservations about it. The property is a former hotel. Because of this, 3 of the units have to share a bathroom, and each floor (3 floors) has a shared kitchen.

I know a huge part of this is the numbers of the building: vacancy, cash flow, and things like that, which I’ll find out soon when the seller gets me the financials. I just wanted to know if anyone had any experience with a project like this. Is it more advantageous to try to put a small kitchenette in each unit, or should I just use the building as it is currently? Is it a huge, expensive undertaking to try to put a small kitchen in each unit or is there a way to do it efficiently? And would it even get me a much better tennant?

Any advice from someone with experience in something like this would be greatly appreciated!