new guy buying a SFR and a multi-unit...with questions...

[Patrick Donley]

Hi BP people:

My name is Patrick Donley and I'm from Columbus, OH...apparently one of the top 25 hottest markets according to an article I read on the site last night. I just bought a SFR in a short sale for $22,500 for a home that sold for $60,000 in 2001. Avg. sales price in the neighborhood is around $55,000. I'm putting $10-$15,000 into it and planning to list it for 30-45 days once the rehab is completed. If I don't sell it for close to the median range, I'm going to rent it and think I can get at least $700-$900 a month for it. Most of my available funds are tied up in this project.

The house is in a pretty bad part of town, but has gotten a lot of press that it is turning the corner....warehouses converted into artists' studios, a brewery, and pubs and more upscale restaurants are now there.  Some big commercial developers have also planned large mixed use projects in the area.  It also has the highest murder rate in the city.  

I don't know if I should flip this or if it should be a long term hold?  

I just found what looks to be a screaming deal in the same neighborhood.  A 4 unit multifamily.  Two studios that rent for $500/each and 2 1 bedrooms that rent for $650/each.  The current owner is an 80 year old man who has 4 rentals.  He maintains everything including mowing and he is tired of it and just wants to sell the place.  It was listed at $50,000 and he has reduced it to $35,000.  I think he'd accept $30,000.  He rents it as furnished units and he pays utilities.  I ran the numbers and it cash flows about $1000 per month.  It doesn't need that much work.  Maybe $10,000 worth.  I'd pay cash for it.  Cash on cash return is 28%.  That factors in hiring a property manager to manage the property.  

Part of me thinks I should jump on the deal.  Another says I should be more conservative and finish my current project and either get it flipped or rented and see how it is being in this neighborhood.  

I'd love your thoughts!  Thanks in advance....Patrick

[Scott Harper]

it looks to me that Mark Nolen has his BP site set somehow to send the same message to anybody posting under new member regardless of what they say. Patrick, I read your post but dont know enough about Ohio. Welcome.