What’s the best investment strategy?

Question

I am new to investing and would like to house hack. I came upon a property that I initially thought of as a house hack. It is a 2 family and I would live in the in law suite in the basement. Both units are occupied and below market but would still cover the PITI. Sweet!

There was an open house and the tenants were there. They complained about the owner (landlord), and said there was mold in the house and they reported it to the city. They were definitely disgruntled. It seems like there are other issues (Leaks). When I spoke to the owner, he said the tenants threaten him, curse at him and he just wants out. Their leases end in March.

The mold issue would have to be addressed-not sure how much that would cost- and not sure I want live with baseline irritated people.

Option 1: buy the property, House hack, evict current tenants, mold remediate/renovate ($$?), and rent to new people

Option 2: master lease agreement, don’t live in it, improve management, create equity through renovating/renting at higher prices, and buy the property with equity

Option 3: anything else I haven’t  thought of!

Joe Villeneuve · Answer

No "might"...and not just because it's the first one.  Learn to recognize that "deal".  Hard to find in an area just means look in a different area.

Neal Collins · Answer

When the tenants have already turned the landlord into the city and you expect to buy the building, you can anticipate a likely rocky road. Now the property is on the city's radar, the tenants are emboldened, and you're going to have a lot of pressure to fix the issues in short order.

Joe Villeneuve · Answer

How about Option 4:  Look for a different property for your first one.  This property has all the signs of trouble with a Capital $.

First lesson in REI 101:  The goal isn't to get the property...it's to get the deal.  There'$ an enormou$ difference between the two.

Second Lesson in REI 101:  Sometimes the best deals you make are the ones you don't.

L. Brown · Answer

@Don Konipol I’m a newbie- can you explain why there’s no deal here?

Don Konipol · Answer

That says it all.  there is no deal to be made here.

L. Brown · Answer

@Lola Brown the ask is $460k (over valued for the condition its in). He bought it 19 months ago for $335k

L. Brown · Answer

@Chris Hopper thanks for your reply. I was thinking the same thing about it being an opportunity, but have been getting a unified no... this would be my first property so I don’t want to screw it up (too much). The ARV after renovations is about $520k.

If this were you, how would you structure the deal? Owner occupied? Master lease? Something else?

Chris Hopper · Answer

Sounds like you should be able to steal it!  Everyone is saying to walk away, but if you can get it for a HUGE discount then do it.  Offer tenants some cash to move, get it fixed/remediated, and new tenants in there.  Could be a great deal if you can get the right numbers.  You never mentioned sales price or ARV, so can't give any advice there.

L. Brown · Answer

@Joe Villeneuve thanks, I definitely have thought about moving on, I just don’t want to miss an opportunity and the right deal can be hard to find in my area. But you might be right, especially for the first one.

What’s the best investment strategy?

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