Deal Analysis advice on possible hidden gem

[Prince Martinez]

Hello, I am a new and learning real estate investor to be. I have been doing deal analysis for awhile now but this one property suddenly caught my attention. I found out that the current landlord is under renting the 3 separate tiny homes on one lot he owns, 1b1b each. One for 500 and the other two for 700, it was noted that all three homes are rented out and the tenants would like to stay. The area however has a rent price of 900 or so at average. I understand that the homes could use some remodeling, and that two have been somewhat remodeled already. As well as not having included the water bill into the analysis, just as it was stated that the landlord includes. I am quite interested in this deal, as I feel it’s rented very undervalue and I am comfortable adding value and making repairs on the three tiny homes. I have 60,000 dollars saved away specifically for a rental property. I have not any connections in real estate though, besides a few friends who have two properties each under rental. I do however, have the capital due to my own Construction company, and am willing to self manage this property to gain a learning experience before having a management firm handle the property for me. Any advice and eye pointers into what I’m not seeing is highly appreciated, of course there are a lot of unknowns, and this is just a deal analysis, but from the rent perspective it. It seems like a possible purchase. Here is some unit information. https://www.biggerpockets.com/analysis/rentals/ea1e841e-8af1...

Unit 3 Information
• # of Beds Total: 1
• # of Baths Total: 1
• Actual Rent: $500
• Occupant Information: Tenant Occupies
• Features: Central Air, Dishwasher, Range/Oven, Wash/Dry Connect
• Electric Included: No
• Garbage Included: No
• Gas Included: No
• Water Included: Yes
• Maintenance Included: No

Multi-Family Information
• # Of Units Total: 3

Unit 2 Information
• # of Beds Total: 1
• # of Baths Total: 1
• Actual Rent: $700
• Occupant Information: Tenant Occupies
• Features: Central Air, Dishwasher, Range/Oven, Wash/Dry Connect
• Electric Included: No
• Garbage Included: No
• Gas Included: No
• Water Included: Yes
• Maintenance Included: No

Unit 1 Information
• # of Beds Total: 1
• # of Baths Total: 1
• Actual Rent: $700
• Occupant Information: Tenant Occupies
• Features: Central Air, Dishwasher, Range/Oven, Wash/Dry Connect
• Electric Included: No
• Garbage Included: No
• Gas Included: No
• Water Included: Yes
• Maintenance Included: No

[Carl Millsap]

@Prince Martinez on the face it looks like a feasible deal. 

1. How much time is left on the current leases? Will the current cashflow cover your expenses at the stated purchase price? If the tenants have long term leases you may not be able to increase rents until those leases expire. 

You don't want to start off in the hole.

2. What will the cost of renovations be? 

How long will it take you to recover that investment with the difference in rent? Let's say it's going to take you $7k to renovate a unit not including the carrying cost of having it vacant. On the unit currently renting for $500, when renovated the rent will be $900 so it'll take you almost 18 months to recoup the $7k investment. ($7k divided $400).

3. How did you verify your numbers? Did you check local listings for rent estimates? Talk w/ property managers? 

Long story short let the numbers make the decision for you.

1. Plan for worst case scenario.

2. Ensure the cashflow covers your expenses.

3. Don't let the emotions lock you in. Walk the property with someone not tied to the deal, they may see something you don't. Trust me this saved me from buying a house that was about to fall down early in my journey. 

Hope this helps