Analyzing 1st deal . . .what am I missing

[Amanda Brown]

Hey everyone. I am analyzing a deal & I'm nervous that I may be missing something just from inexperience and could use input from some seasoned pros.

The plan:

Building 1 is a duplex currently rented. Building 2 I plan to turn into a boarding house on upper floor (already set up with 7 beds & 2 baths) using the smallest bedroom for a community kitchen space. Plans for the lower level of this building include 4 1br apts plus a unit for on-site manager.

The numbers:

$2600 current duplex rent

$2850 upper floor rent

$3000 lower floor rent

I've walked the property & met with the listing agent. From what I can see, I'm estimating $120,000 for rehab (mostly for a new roof & reconfiguring lower level). I have a GC that will walk it soon to confirm. 

With all that said, I'm stuck on an offer price. Asking is $350k but hoping to get it for closer to $275k (buildings are a package deal).

Questions: Am I forgetting to consider something? Is this a deal I could propose to an HML (if I can find one)?

Any insight would be GREATLY appreciated. Thank you in advance.

[Alex Wesling]

Quote from @Amanda Brown:

Hey everyone. I am analyzing a deal & I'm nervous that I may be missing something just from inexperience and could use input from some seasoned pros.

The plan:

Building 1 is a duplex currently rented. Building 2 I plan to turn into a boarding house on upper floor (already set up with 7 beds & 2 baths) using the smallest bedroom for a community kitchen space. Plans for the lower level of this building include 4 1br apts plus a unit for on-site manager.

The numbers:

$2600 current duplex rent

$2850 upper floor rent

$3000 lower floor rent

I've walked the property & met with the listing agent. From what I can see, I'm estimating $120,000 for rehab (mostly for a new roof & reconfiguring lower level). I have a GC that will walk it soon to confirm. 

With all that said, I'm stuck on an offer price. Asking is $350k but hoping to get it for closer to $275k (buildings are a package deal).

Questions: Am I forgetting to consider something? Is this a deal I could propose to an HML (if I can find one)?

Any insight would be GREATLY appreciated. Thank you in advance.

Make sure you're looking at holding cost. If you hit a HML you'll need to understand the loan rates you get from HMl and then conversion to a conventional loan. Also your cost associated with holding (utilities paid by landlord or tenants, taxes). Also you'll need to check with local ordinance if converting to boarding house is legal and steps needed to do so (you don't want to pay assuming those numbers to only be told you can't do it)

you hml money you can roll into your conventional loan but you’ll need to understand the scope of time from the Gc to make sure it’s feasible