First time investor trying to decide which multi-unit to bid on

[Elyse N.]

Hello! Hoping to get some advice on which property I should place a bid on. Both are in the same town, about 40 minutes from my home. Property 1: listed at $499,900. 6 units, all 1 bedroom, 1 bathroom. Extremely well taken care of. All appliances/cabinets/bathrooms are original (1960s) but functional and look spotless. Each unit has its own small hot water heater. Located on a busy street near a couple other multi units. NOI according to owner is $37,788. Unclear why owner is selling. Property 2: listed at $604,000. 5 or 6 units. 2 1 bedrooms, 2 2 bedrooms, and the top floor was used as a 4 bedroom but can be easily converted back into 2 2 bedrooms. The previous owner lived on the top floor for 30 years and simply opened the doors between the two apartments to make it into 1 large unit (with 2 kitchens). Also extremely well cared for. Some updates done. Also has a 2 car garage that the owner was not renting out. Located in a nice single family home neighborhood. NOI $36,890 according to previous owner. Owner is 80 years old and moved to Florida to retire. Do I go for property 1, which is $100,000 less and currently makes $1,000 more each year, but has less earning potential long term (since it's all 1 bedrooms) or property 2, which is more expensive, currently has 2 empty units (that the owner moved out of), but I think has higher earning potential?

[Ben Garrison]

I agree. I was in a similar situation recently. Bid on both and only ended up getting one of them. It's common practice to submit LOIs first and sort out some of the details before you go into a formal contract. If they are good and you keep waiting someone else will get them both! Good luck.