Is this a good deal?

Question

I’m in NW Indiana and I ran across a property that has some potential..

Or at least that’s how I see it. Asking price is low 20s and I’m sure it’ll require a full renovation. It’s a 3 unit 2 bedroom/1 bath and the way I’m looking at the math it should be a decent return.

My question is how do I fund it? This would be my first property. I’m looking at a buy and hold strategy because I believe the area I’m focused in is going to appreciate in value.

Corby Goade · Answer

I'd tend to agree with @Marcus Auerbach- a cheap property and a good deal are two very different things. I get calls almost every day from new investors who are trying to dump a "cheap" deal that they picked up, only to find out that it's too expensive to rehab, they won't recoup their costs and their turnovers more than eat their profits.

While a $20k property might be tempting, this type of investing is far from passive.

Marcus Auerbach · Answer

It certainly is dirt cheap! If it is a good deal is another question - as you know there is a difference between price and value.

Most sub 50k properties are bad deals, let a lone a 3 unit for 50k - they are so cheap because nobody wants them, in particular investors who have been around the block once or twice.

Adrien C. · Answer

A 3 unit for $20k? I’d check with the building department to see if it’s a legit 3 unit. I’d also make sure it isn’t on the demo list. That’s a stupid low price for a 3 unit unless it’s about to collapse. Junk multi in Hammond is easily $20k per door. If you’re not able to buy it and find the massive rehab, let me know.

Daniel Guerra · Answer

In terms of funding, you can wholesale the deal to another investor and not use any money. If you want to keep it, you will need to find money from a private investor, hard money lender, bank lender, your own cash, etc.

Reach out and I'll do my best to help out. :)