Advice Needed: Solid ATL deal but vandalized

[Ericka G.]

Hi there,

Found what appears to be a great house for our 5th investment property - a 5bd/2bath a few blocks from MARTA (Atlanta's "subway") and 2 stops from the airport. There is an upstairs loft with two additional rooms that could be used as bedrooms or a second living room + bedroom.   House is a 1920s 2 story brick in the Jefferson Park area of East Point (Atlanta), class B or C area

They were asking $99.9k and we agreed on $90k. ARV: $120k(?)

Cost Assumptions
Purchase Price	$ 90,000
Improvements	$ 15,000
Closing Costs	$ 4,500
Total Cost	$ 109,500
ARV		$ 120,000
Revenues		Monthly
Rental Income	$ 2,400
Vacancy/Loss Rate	25%
Vacancy/Loss Value	$ (600)
Gross Income	$ 1,800
Expenses		30%
Net Income	$ 1,260

We rent exclusively to airline pilots and flight attendants, so proximity to airport, public transit, and a lot of space are key - plus an area that is safe.  We should get $400-500 per room on month to month leases from flight crew who commute through Atlanta. Avg tenant stays 3-6 mos.  

The person who renovated the house did a good job, but a thief ripped out the copper wiring, so ALL of the electric needs to be rewired + fixing walls that will be messed up by electric repairs. I've never had to do electric from the ground up before, so that scares me a bit. 

Clearly this area is marginal if folks are breaking in for copper, right?  The numbers still seem to work, but this would be the roughest area we've invested in thus far and the vandalism gives me pause.  This would also be largest house (2200 sf+) with the most amount of work required of any of the deals we've done.  We have healthy reserves BUT I'm afraid of biting off more than I can chew with this one - my husband is leery of any project requiring us to break down walls b/c there is a risk we'll find even more problems.   Area is solid but the house directly next door is boarded up - also a concern.

What do you think, deal or no deal?

[Ericka G.]

thanks for the input! we haven't had to put more than $5k into any of our properties to get them rentable...that is why we are a bit unsure on this one. It's a bigger risk but with a potentially bigger profit margin. Realtor is saying the ARV would be $160k after we fix it up...not sure about that

And, yes, airline crashpads are great investments - that has been our niche and it has been great... Class A tenants in Class B/C areas close to the airport. Everybody wins.