New Member from Southeastern MA - Advice on Rehab and Rent Opp

[Andy Kurtz]

Greetings from Southeastern MA. I'm new to biggerpockets, and am getting back into RE investing. albeit with some trepidation. In 2009/2010, my wife and I had 13 units spread across 3 different buildings. We did great on one, lost a little on a second, and got clobbered on #3. My autopsy of the situation tells me we did 3 main things wrong:
- We were overleveraged (heresy!) leaving no room for a repair budget. Maybe saying we didn't buy right would be more apt
- I acted as my own property manager, which evolved into me feeling sympathy for my tenants. Also led to not getting paid on time.
- I didn't analyze the neighborhood on any of the properties. Funny how the one we did the best on was across the street from a teaching hospital, and the ones we didn't do too well on were C areas that descended into D areas quickly

We always said that once we had some equity built up in our primary house, that we'd tap into it and start investing again.

That said, I may have found one that I'd like some advice on. I’ll preface this by saying I have yet to see the inside of this property, or engage the seller in negotiations. I’d like to get some ducks in a row before starting.

The property is a 3-family, less than 5 minutes from my house in a neighboring town. Listed on MLS for $224,900. There's no for-sale sign out front, which leads me to believe the tenants do not know it's for sale. Looking at the outside, it needs work to increase it's curb appeal. Aluminum siding, pitched roof (not sure on useful age). wood front porch that needs updating. Curiously, there is a brand new emergency staircase leading all the way up to the third floor, which cost some serious money to put in.

First and second floor are both 3/1, heated by the same oil furnace, third floor is a 2/1 with gas heat. Water is included in the rental agreements as well. I'm assuming they're all under lease, which in MA is a pain. Pictures on MLS indicate each unit needs updating. It's tough to tell how much to budget for repairs, though I'm estimating $25/sq ft, which would be $66,000. Once updated, rents could fetch $1000-$1200/unit. ARV on a property of this type would be about $330,000.

My questions are:
- I’m leery of using the 70% rule on my first rehab/rental opportunity. Sure, I could come in and offer $125,000 cash for the building, but that doesn’t get me close to a deal. At what point do you walk away?
- Are there non-recourse lenders that would lend on a project like this? While I have enough $$ to acquire the house, I couldn't cover the repairs on top of it. I'm afraid I wouldn't qualify for a traditional mortgage (my DTI would be too high)
- Any other advice on getting going would be much appreciated!