If I can close this deal....

[Dominic Lucarelli]

I'm trying to push this deal through. The potential upside is enormous. The short term is challenging. What are your thoughts?

Asking price: $127,000

Triplex, fully rented, owner occupied

Main floor (and full basement): 2 bed, 2 bath. Owner occupied (estimating future rent at $600)

2nd Floor apt: 2 bed, 1 bath, separate entrance. Rented at $550

3rd Floor apt: 2 bed, 1 bath, separate entrance. Rented at $450

**Main floor can support an addition of a small studio apartment. Plumbing in place for a toilet. Need to add dedicated bathroom/shower & kitchen space. Estimated cost to add: $5000 Estimated added rent: $400

**The Main Floor apartment can be separated from the basement area, creating another unit. Basement area could be 1 bed, 1 bath apartment. A dedicated kitchen area would need to be added. This would adjust the rent of the Main Floor apartment to $500. Estimated basement rent: $400.

Now, the catch... the owner is selling the building but still wants to live there. She's lived there for 54 years. I'm trying to get creative with the financing on this one. In the short term, this will be a break-even deal. But once she passes on (morbid, I know...) this will be a smoking hot deal. I'll explain...

My Offer: $60k and allow the owner to live rent-free

This will allow me to buy the building much cheaper than I could otherwise afford. Once she moves on, I can gain an additional $600 in income per MONTH, allowing me to exit as Property Manager if I choose. On top of that, at any point I can add in an additional unit (or two!) for additional income.

Current building income: $1000 + owner + $25 garage rental fee

Expected fixed monthly expenses: $520

Insurance: $115

Property Taxes: $175

Water: $40

Sewer + trash: $130

Lawn Care: $60

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Total: $511.48

7% Vacancy: $71.75

10% Repairs: $102.50

10% CapEx: $102.50

Property Management: Currently $0

Mortgage: $234.73

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What are your thoughts? Am I crazy? Am I risking too much up front? I'm submitting this as an offer by the end of the week.