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Updated over 8 years ago,
Long Term BRRR
I'm currently looking at personal residence that I want to turn into a investment property. Most likely around a 5 year turn around.
The home is currently listed for 120k. It's a 2 BR 1 BA and an estate sale. Rough estimate (in the process of getting some definitive numbers) is about 20k in updates/additions (not including possible termite damage, unsure if they are still active or was treated). It is currently livable, but very dated. The appliances have been sold.
I had my realtor run comps and she came up with 116k. After doing a little research to see the condition of the homes she used in her comps is apparent that most of the comp homes are in fair better condition. She suggested 108k offer.
Running the numbers I'd cash flow around negative $50.00/month at 108k. Honestly I'm okay with in comparison to most of the properties I've evaluated.
Pros: The house has a lot of value add potential. It's very close to a growing hospital with a 3 year flex of residents. The location is on a semi-main road; however, properties around this one on the same road have sold upwards of 170k+. I'm thinking with 20k of updates could bring the home value up to around 130-150k. Which at 5 years I'd refinance and pull the equity to use on a more permanent home and use this one as a rental (rough idea).
Cons: Possible active termites or old damage. The natural gas furnace is very old (1970's or older).
I'm just looking for some additional feedback. I'd probably top out at 100k offer, with 5k in seller assist. Thoughts are welcome and thanks for taking the time reading this.