Multi-Unit Deal

[Joe M.]

This is a 3 unit building located in a very desireable school district and in a very convienent location.

Each of the 3 units has 2 Bedrooms, 1 1/2 baths and garage parking. Comparable rents in the area suggest that the units would rent for about $700/unit/mo

The asking price is $134K which is ambitious considering the following:

The entire buildings water supply is on 1 well located in the basement of one of the units. The building is also on a septic system, although we may be required to hook into the public sewer system (realtor is checking into today.

The HVAC system for each of the units is old and likely not functioning. We would need to replace central a/c and furnaces in each unit.

The units interior is not a complete train wreck, but we would have to rehab bathrooms, kitchens, new paint, flooring etc. One unit appears to have had a grease fire on the stove and there is evidence of smoke damage on the walls.

I've not run the complete numbers but we're probably looking at somewhere around $65K for rehab costs. My realtor thinks we could get the property for around $80K for a total investment of $145K.

This property scares me a bit in several areas. First the water, with the single well supplying 3 units. Second is the septic system and/or the prospect of hooking up to the public sewer and associated costs. Third is the HVAC system and the costs to bring that up date.

The appealing part of this property is that it is in a great location, would likely appreciate in value substantially and the size of the land on the property would possibly allow for expansion (additional garages could be built and rented for self storage for boats/campers etc.)

Would you take this deal?