Should I buy it or not?

Question

Hey!

I am looking into this property in my home town; Biddeford, ME. It is 3 units property was built in 1900 renovated in 1960s. The first unit is 1 bed Apt, second is 2 bed apt, and 3rd is a 3 bed apt. Separate electric bills, off street parking, and they are in a good condition. The buyer is asking for 288k with closing costs included.

Is this is a good or bad deal?

Harrison Smith · Answer

Thanks for the mention @Katie Magoun!

@Saad Hashiem That does not sound like a great deal to me. The middle of the market valuations in Biddeford are about $65,000 for a 1 BR unit, $85,000 for a 2 BR unit, and $100,000 for a 3 BR unit. Given the property you are looking at, anything north of $250,000 would seem overpriced. I also use the 1% rule as a baseline measure of cashflow, if the monthly rents are 1% of purchase price, then the property will cashflow (not withstanding major capex or turnover). Doesn't mean it will be strong cash flow, but there will be something. Anything north of 1% and you will be in better shape. I know many people on BP want 2% rule properties, but I have yet to find any of those in Southern Maine over the last year or two.

I would be happy to discuss further with you if you are interested.

Katie Magoun · Answer

I agree with others, we need more info. Is it currently rented?

In my understanding, Biddeford is a patchy rental market. It has historically been a blue collar (bordering on rough) mill town. I know that it's recently seen some revitalization, but the housing stock is still pretty worn out in many neighborhoods. All of this is to say that your price sounds reasonable for a maintained 3-unit in a decent neighborhood, but could be high for many buildings in Biddeford.

@Harrison Smith is the expert on the Biddeford market. He'd be a great resource! Hope that helps.

Jason Kern · Answer

Hey Saad,

What's your mission? I'm almost always looking at cashflow so I'll analyze to see if it's going to make money monthly. Use one of the calculators on this site to see if you'll make money as it sits. Then see if there are some improvements you can make over time to increase the rents. I'm happy to walk you through it if you want to PM me.

Jason

Tyler Bushey · Answer

If it's the property on Graham st that I saw on Facebook marketplace, I think it's over priced.  My friend used to live in it coincidentally enough.

Andrew Postell · Answer

@Saad Hashiem I feel like this might be a better post in the Maine forum.  I see you have one local already responded here but more Maine people might respond in that forum rather than the Texas forum here.  Good luck!

Eric Mcginn · Answer

Doesn't sound like an amazing deal. Lots of multi units in Biddeford for $200k ish.

1900 for the date of original build usually means it's just not on record an exact date, so not actually 1900 likely.

Totally depends where the property is located. On the water? Walking distance to restaurants and Amtrak?

Granite foundation? Heating? Look at comps. Good luck!

Shawn Mcenteer · Answer

Tough to answer unless someone on here is from Biddeford, ME area.  You may want to provide more information; rental income, taxes, property management, etc.

Should I buy it or not?

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