My 2nd deal

[Matt Blutowski]

By the end of the day, I think I'll have an accepted offer on a duplex in a trendy part of town. The building has three units, though it only has occupancy for two units. The property needs some work before it can be rented. The seller wanted to move quickly so I made a cash offer. I plan to fix, then rent and hold the property. I'll refinance the property once repairs are made. I'd appreciate any feedback on my numbers.

The purchase price was $110,000. I estimate $10,000 in repairs to re-point bricks, interior water damage, roof on a garage, other smaller repairs & over-runs.

The first floor single bedroom will rent for $750, the two bedroom second floor will rent for $950. The third floor single bedroom would rent for $550 - if I can get an occupancy permit for a third unit. If I can't get it, I'll convert to a 3 bedroom which will increase the rent by $250. I can get at least $100 for the garage.

PITI after repairs and refinancing 70% will be ~ $1100 tp 1350. Monthly rents will be from $1900 to $2350.

The repairs:

A 20' by 20' section (roughly) of bricks needs re-pointed, and the there is some water damage from water seeping between bricks on one corner of the house. The walls to a 2 car garage are there, but the cement ceiling is long gone. The utilities are NOT separate and the 2nd & 3rd units don't have access to to the basement.

I would like to split the utilities, or at least split the electric and install electric heating in the upstairs units. I have no experience with this and don't know what is possible - maybe I can run electrical up the walls that I'm repairing? This would add to my cost estimate mentioned above.

I would also like to get the third floor unit legal. How much trouble will I make for myself if I don't bother with getting a new occupancy agreement? The 3rd floor does not have a fire exit - but there is an accessible flat roof that could hold a deck and stairs down to the 2nd floor rear deck. Again, this would add to my estimated costs.

I will do much of the work myself, but will have a contractor repair most of the brickwork.

This is my 2nd property, and first time I've bought something that needed work, and the first time I've bought with cash. I am particularly interested in peoples positive experiences with splitting utilities, adding a unit (legally), re-pointing and my numbers.