[Calc Review] Help me analyze this deal

[Andrew Reyes]

Hi All:

I am getting serious about REI and have a goal of making my first offer on a property on Long Island by June 30. I have been analyzing one deal per day and have found that this strategy will be difficult at listing price with minimal rehab. I analyzed this deal assuming I could convert this SFR to a tri-plex. Please share any feedback on the many assumptions I made in this analysis (described in further detail below).

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*This link comes directly from our calculators, based on information input by the member who posted.

Assumptions/Methodology

Listed for $500k, this SFR in Farmingdale, NY (Nassau County) has been on the market since December.

Offer: $350k. Zillow indicates that this property was lasted sold in 2006 for $454k. Assuming 3.5% down and 6% interest, this should cover the sell's mortgage

Estimated repairs: convert this SFR to a tri-plex by adding a kitchen to the basement (currently 2 rooms with bathroom) and 2nd floor (currently 3 bedrooms and a bathroom). The first floor currently has 2 bedrooms, bathroom, kitchen, living room, and dining room. Assuming 3 kitchens ($20k each) and 3 bathrooms ($5k each) plus a 10% over-run the rehab would cost approx $82.5k. The basement has an outside separate entrance and the 1st and 2nd floors would need to be split. Assuming (BIG ASSUMPTION) the stairs face the front door this can be accomplished sheet-rocking the entranceway leading to the stairs and adding 2 interior doors. Does anyone familiar with this area know if/what permits are required and what the might cost?

ARV: $570k. Based on Zillow comparable homes model.

Time to refinance: 6months from purchase. assumes 3 months rehab one month lease-up and 2 months to stabilize.

Acquisition: private lending from friends and family accruing 6% interest payable upon refinance. Is 6% a fair rate?

Monthly Income: assumes HUD FY20 Fair Markey Rent for the Nassau/Suffolk, NY Metro. Basement - 1 bed/1 bath ($1,624). 1st Floor - 2 bed/1 bath ($1,992). 2nd Floor - 2 bed/1 bath ($1,992) Is anyone familiar with Section 8 housing in Nassau County? Are there additional considerations if the plan is to place a tenant with Section 8 vouchers? (@JosephAsamoah his is based on your strategy discussed on episode 356 of the BP Podcast). Presumably, the first floor should command higher market rent as it has a separate living room, kitchen, and dining room and the other units would have eat-in-kitchen.

Monthly expenses: assumes insurance and property taxes based on the realtor.com listing as well as 10% vacancy, 5% repairs, and 5% capex.