Please help in analyzing a Quaruplex in Raleigh for STR and LTR

[Ramez Qubain]

Hi i need your help in analyzing this property. as you might know, Raleigh doesn't have many small multifamily homes due to zoning changes in the 80s and 90s. however i have come across this newly renovated Quad. please see this link and see attached the analysis. https://www.biggerpockets.com/...      https://www.zillow.com/homedet... 

my biggest concern, is the rental income. the advert says 1,500 per unit per month, however when i use the rental calculator in bigger pocket tools i get a much lower number. another concern is, there are no comps in the area to assess the value of the property since there are not too many multi family homes in the area. 

also how can i assess the income if i turn it into a short term rental?

once i fine tune the above numbers, i am then able to decide on how much the home is worth. 

[Kenneth Jackson]

This property is so unique that you get to decide what it's worth to you, just like the listing agent or owner who presented it at this price.

$1,500 might be a stretch for rent for a 750 SF home in this area, especially with how tight each space is in the home. You can get a studio in the Peace building in the heart of Glenwood South for $1,655 with arguably a better layout and a little less square feet.

We are definitely an appreciation market, if you bought at $900,000 and could charge $1,200 in rent right off the bat you'd be close to breaking without property management fees. While I'm not versed in AirBNB as much as long term rentals, I don't consider the AirBNB returns without knowing I have an exit strategy to rent it long term and the above numbers barely make sense at $900,000 depending on your strategy.

Also, Raleigh has stricter AirBNB laws than its Durham counterpart (https://raleighnc.gov/services...). See Number 6.

1. For any multi-unit living use, no more than 25 percent, or two dwelling units, whichever is greater, may be used for short-term rental in any single building.

So do you have a strategy that has two long term units and two short term units? 

I think this one is a no-brainer as to why it has been sitting at the list price. For a house hacker that qualifies for this it would be an enormous stretch, for an institutional investor thats looking to park money there's no cake on top at the current price (appreciation) and there's no cash flow. Unless you're looking for a pretty house and don't care about investment principals I think this one will continue to sit. 

Every flipper/investor wants to get their money out at some point, so somehow, someway it'll move. This one was bought at $375,000 in June of 2020. I can only guess how much they've invested in the past two years of the rehab and holding costs, but can't imagine it's put them back $500,000k in that period. I just think it's overpriced and the delta between your price and their price might take months to find an agreement, months when you could've deployed capital and energy elsewhere.