33unit building rebah. Am I crazy or is it something feasible?

[Andrea Galvez]

I am interested in a building with 3 comercial spaces, and 30 appartment units on top (around 34K sqft). The building needs a full rehab. It looks structurally sound in the outside, but it has holes in the roof, floor, and theres a lot of water damage in the inside. The electrical, plumbing, and HVAC will probably need to be updated. I have enough money for buying it, but I would end up with 50K to start repairs, and I will need license contractors for this proyect. 

I was thinking about fixing the roof, inside structure and maybe 2 comercial spaces to get started and then keep fixing some units, rent them out, fix some more, rent them out, and so on until is finished. I could start funding it with $110K/ year (current income), and then use the rent from the fixed units.

I have experience doing rehab on small multiple unit homes, but this would be something new to me. SO based on your expertise, am I crazy? or is it something feasible?  

[Sarah Hatton]

Hi Andrea, 

I think the biggest questions here are around your experience with rehab, liquidity situation, and time constraint. From your description it sounds like you are planning to fund the rehab from your personal income, something I would not recommend. Your capital constraints will slow the speed of your project and how quickly you can rent out the spaces and make returns. Second, projects almost always go over budget and this one seems to be no exception (water damage, holes in roof, floor, HVAC, etc). Lastly, you are going to be time constrained working a 9-5 and trying to work alongside this project. It will create stress and force you to make lifestyle sacrifices to move the project along. Personally, I would start on smaller multifamily/commercial spaces first and work your way up to bigger projects!