Risk V reward on BRRR opportunity

[Lindsay Kuzara]

Hey BP! I'm currently under contract on my first investment property and am looking for some pro tips and advice. 

Property: distressed 1975 SF in central Oregon, lot is sized to accommodate an ADU. Property needs rehab, most components are original to home. Budgeting $40K to bring it value, will be DIYing most of it, including kitchen, floors, paint, replacing windows, removal of popcorn ceilings.

It's a tough market here, so I'm not necessarily purchasing at a DEAL, but it's fairly priced considering condition and market. 

Im looking for feedback on what I've identified as risk in the current situation:

-since it's pre 1978, lead paint and asbestos may be present. Is it wise to get tested, or just act as if it's there and take all precautions?  Ive read mixed things on DIYing an older home.. 

-anyone run into issues with renters because of an older home due to these potential hazards? 

My dilemma is I feel there is a lot of opportunity with this particular home and lot as an ADU can be added ( as long term or STR) however am concerned with the potential risks (both cost and tenant facing) with it being a pre 78 home.

Any thoughts or advice? I don't have a broker, I'm representing myself on my first transaction... 

[Chris Perumean]

Lindsay -- 

If memory serves, the 1978 or older home issue is related to the RRP rule (lead Renovation, Repair, and Paint).  This came out in 2008 (enforcement started in 2009) and was specific to lead-based paint and other materials.  I believe anything related to asbestos remediation doesn't have an age limit, at least to my knowledge.

With respect to your specific dilemma -- You don't have to worry about any ramifications if you're doing the work.  Licensed contractors have to be RRP-certified, treat the whole place like nuclear disaster strike, and get fined a ridiculous amount of money if any bags aren't taped closed properly (not that I'm bitter....).

In all seriousness, the lead/asbestos stuff is likely a non-issue for that age of house, as it was built at the tail-end of all the changes taking place.  You can buy a lead test kit from any paint supplier and test yourself (super easy/cheap). 

I'm pretty sure the seller must disclose any "known" hazardous issues.... but I can't say for certain. Hoping someone will chime in on that part... 

Good luck!