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Updated almost 8 years ago,

User Stats

706
Posts
171
Votes
Joshua D.
Pro Member
  • Rental Property Investor
  • Pittsburgh, PA
171
Votes |
706
Posts

Analyze This Deal! Would you go for it?

Joshua D.
Pro Member
  • Rental Property Investor
  • Pittsburgh, PA
Posted

Hey guys,

I have an opportunity to purchase an 8 unit apartment building (there is a 9th apartment near completed renovation) in a great area that also has a big storage garage and office inside. The garage is large enough that it could be rented as well, and I am considering turning the office into a one-room efficiency apartment, potentially. The tax assessed value is $144,000. It is in a perfect location for us. It is not being managed well. The rents are WAY too low for how much the area would typically command. For example, there are apartments being rented for $465-$480/month that should be renting for $650/month or more.. Currently, they are pulling in about $3800 in gross rents. We would up the rent by about $100 per unit if we purchased, bringing the gross rents (without expenses deducted) to around $4500 per month. 

We offered $175,000 last year and it was accepted, then we backed out, due to our modest level of experience with multi-units as well as the foundation looking iffy. The building needs about 20k in electrical work. The foundation is also a bit of a concern, as it's secured with wood beams, and those really should be metal or have metal supports attached to them, I would think.Now, we are revisiting the deal. Since the time we last spoke, the owners have done some cosmetic work to the building and plan on having the electrical fixed. They now are asking $215,000. The owners are friends of ours, I also would like to add. 

So here are my thoughts, tell me what you think. I am considering going in with an all-cash offer of $180,000. We tell them not to worry about the electrical work, we will get it fixed ourselves. We offer 100k up front, and ask if they would be interested in owner-financing the remaining 80k. If not, I'd still be able to finance the deal, if necessary. We currently have 7 SFH and 1 duplex. This would be our biggest building. The max we would offer would be $190,000.

So. Analyze this deal. Is it a GO or a NO? 

  • Joshua D.
  • Loading replies...