First time investor: Need some guidance

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Hello my name is Rudy and I've been given the opportunity to acquire my first investment property. 

A little description on the property. It's location is 7774 Maple Ave. Fontana Ca 92336. Sellers price is $168,000. Lot size: 0.9 acres. House on property is in bad condition.

My initial idea was to purchase property and turn it into a multi family building. According to the city of Fontana the property is on a residential zone where apartments cannot be built. They also mentioned that the only opportunity I'd have to build multiple units would be to divide the property into to two parcels and build two units (Duplex) on each parcel.

I see this property as a good investment opportunity. Being my first I'd like to see if there are any ideas on what could be done with this blank slate? Should I divide the property into two parcels and build two duplex? I'm looking into making this property a long term investment.

This is the Zillow link to the property:

http://www.zillow.com/homedetails/7774-Maple-Ave-F...

[Juan Carlos Quiroz Zolezzi]

Hi Rudy,

Welcome to BP, this is a great site with tons of information.

If this is your really first endeavor in Real Estate, I would caution you against the strategy that you are proposing. It is a very interesting strategy and without knowing all the numbers involved, I can tell you that it is more complicated and lengthy than it seems. Subdividing and new construction is a lot of work.

Have you done all the math on this?

As I understand your post, you are going to buy this property for 168k, then you are going to try to subdivide it (yes, less than 5 lots is easier than 5 or more, but it is not as easy as it sounds), and then you are going to build new houses that you will rent. Your strategy is to buy and hold.

How are you going to carry all this? are you buying with cash or financing? if you finance it, you should be careful if you demolish the house without the lenders consent as the lender may be considering that house as part of the collateral

Then again, part of your strategy should include to salvage the house so that you only need to build one additional house. If you salvage the house, then you can do min repairs and rent it to help carry the project to the end.

Have you considered the rehab cost for salvaging the house plus the cost of building a new house or the cost of building 2 new houses.

How will you finance the new construction? not a lot of lenders finance new construction and this is a more complex process and more expensive than getting a regular agency loan.

Anyway, this may be a more complex project than it seems and more complex than getting a cash flowing property with simple or no rehab.

Hope this helps,

Cheers!