Dilapidated 5 Unit Multifamily Mid-Century Modern Building - IOWA

[Amelia McGee]

Hey all -

I need help analyzing a deal on a very unique 5 unit multifamily property in a small town in southern Iowa. The building is a large brick building designed by a prominent engineer in the 1920s.The town where it's located is actually my hometown so I know the area very well and still have a lot of connections there. There is a significant need for updated/low maintenance/safe housing so I do not think there would be any problem finding tenants for these units. For example: I have another 3 unit multifamily in this town and was able to fill the apartments the first day I posted the listing. I also own a SFH in this town and had that filled before we even took possession. There is also a hospital, large grocery chain warehouse, only school system in the county so there are people with money who would be willing to pay a premium price for a nice place to live. Retirees, doctors, teachers, etc.

Couple Predicaments:

1. The owner has let the building sit vacant for 20+ years. The roof has leaked extensively and it will likely need to have all new systems (electrical, HVAC, plumbing, flat roof, refurbished steel casement windows, etc) along with significant updates to flooring, walls, bathrooms, kitchens, etc. I have never done a major renovation like this so I need some help estimating costs.

2. My other issue is the owner himself. He's 82 and a little bit off his rocker - thinks he has a one of a kind gem that is worth hundreds of thousands of dollars - and it could be but not in the state that it's in right now. We've offered him $45k cash or $70k owner financed with $20k down and a balloon payment in 2 years. Still waiting to hear back from him on these offers. Any ideas on how to get him to sell? I would be willing to go up in price as I think the ROI would still be worth it but I'm not sure how to go about estimating this.

3. There are VERY few comps in small Iowa towns to compare to. I don't know how to get to an ARV to be able to estimate my top dollar offer. The plan would be to buy cash and get a construction loan for repairs.

The units themselves are huge. There are 2 - 2bed/1ba on the main floor at probably around 1,200sqft each. There are 2 - 2bed/1ba and 1 - 1bed/1ba upstairs that are also very large with huge bedroom closets. There are two large storage units in the hallway upstairs that could easily be converted into laundry (right now laundry is in the basement and we would want to move these upstairs to get a premium price for rent). The basement is also a full basement with 9 foot ceilings and a bathroom. Could easily be turned into a 6th 2 bedroom unit. I think it wouldn't be out of the question to ask $850/mo for the bottom units and $800/mo for the top units. There is another building in town that was built by the same engineer and renovated 5 years ago that rents for $950/unit and is always full with a wait list.

If anyone has any advice or experience with something like this it would be greatly appreciated. Also, if there are any investors in Iowa who would be interested on partnering for this deal, please reach out to me privately.

I'm posting a Google photo of the property for reference - it's the best I could get!

Thanks for reading!