$400,000 Multi-Family in Central Jersey (worth it?)

[Max Cordova]

Currently looking at a multi-family property in the Central Jersey area.

They are asking for $425k for the property. 

It has 4 units (2 bd/1 ba)

Each unit can rent out for a minimum of $1200/month.

PROBLEM: Asbestos, mold, and lead in the building. Going to look at it this weekend and knowing this ahead of time and got a few documents from the relator about the condition of the home and it seems like it's in okay condition.

Knowing what I know, what is a good offer for this property? I will need to to a rehab into 20-40k range plus the asbestos, mold and lead., plus underground oil tank, too.

I would love to hear opinions and feedback.

[Jaysen Medhurst]

What's the ARV, @Max Cordova? Removing the lead, asbestos, mold doesn't really add value so much as not subtract it. Meaning, it can bring a property up to FMV, but if FMV on a similar (already remediated) property is already $425k, you won't gain any value by doing this work.

I would approach this like a lean flip. Assuming there is nothing else really wrong with the property:
Offer = (ARV*.85) - Remediation costs

If there are other things going on, then use the 70% rule. Might not make for a competitive offer, though. Remember most asbestos doesn't have to be addressed, unless you plan to disturb it. Lead may not have to be addressed, if there are no children in the units. Even then it can be encapsulated (varies by state law). Mold...well, you have to deal with that.