Second Property: Harrisburg, PA Three Unit

[Joe Chirdon]

Deal: 

1929 brick 3-unit (all two bed one bath units) on .38 acre property in C to C- neighborhood. I closed the deal in late February.

Purchase Price:

$70,000 (20% down and 4.6% 30 year fixed rate mortgage). It was listed at $100,000, but my agent suggested making a $70k offer, and it was accepted w/o a counter-offer to my surprise. I later found out that the sellers were motivated b/c they were getting divorced. I should have offered 65K lol...  The property appraised at 80k at closing!!!

Details: 

The property needs work, mostly cosmetic and landscaping, and I'll have to spend a few thousand on new furnaces, roofing, and other miscellaneous fixes over the next year or two. It came with two existing tenants who aren't ideal, but they have paid rent on time....so far. The previous landlord set their rents super low, i.e. 525/mo and 455/mo. The one tenant has lived in the top unit for 22 years! My GF and I moved into the third unit, which was vacant and needed the most work.  We're slowly improving it, mostly on our own. Gotta love sweat equity. The 525/mo lease ends in a few months and I think I'll bring him up to 650ish/mo. I might raise the rent on the 22 year tenant too, but not much b/c she is so reliable and quiet. 

Based on my numbers the property is costing us about 500/mo after all expenses/tax/etc....However, my numbers indicate that if I eventually move out and get all three units up to market rent (i.e. 700/mo), it should cash flow $600/mo or more...Not bad in my opinion.

Thoughts...?