Making my first offer!

[Kristina Lugo]

Let me know your thoughts on this deal:

I’m offering $81k (asking price) for a 2 unit building:

Unit 1: 2 bed, 1 bath w/den could be a 3rd bed $900 rent

Unit 2: 1 bed, 1 bath also w/a den that could be a 2nd bed. $700 rent

The offer will be contingent on inspection and appraisal.

The property has a finished basement (which I will occupy), large double lot, 2 car garage.

I plan on using an FHA loan with 3.5% down. My monthly payment is estimated at $878 (mortgage, taxes, hazard, mortgage insurance). I plan on adding an additional $100 to expenses for reserve fund.

The building is solid! Each unit needs very little work. Based off my experience $5,000 to update and 3 weeks worth of work. The sellers agent has a few people interested in renting out the units as is.

After a year of it being a primary residence I could renovate the finished basement to make it an appealing 3rd unit with 2 bedrooms.

Cons:

D class neighborhood, close to a C class neighborhood. I drove through the area on different days during different times and it’s pretty straight. No loitering or gang activity. It sits in the corner. One street is desolate the other street has well maintained single family homes and 2 flats. And there’s a church. Streets are clean.

Taxes are HIGH! Property sits on a double lot so there's 2 pins totaling almost $4k a year. I'm concerned that taxes will go up but my ability to raise rent is limited. This property is about the cash flow. Getting expenses covered by the renters then additional income to save up for the next down payment. The neighborhood isn't going to appreciate at any wealth building rate, tbh. I don't think it has the potential to BRRRRR in the next 3-5years.

So please! Let me know your thoughts!! Thanks in advance.