[Calc Review] Help me analyze this deal

[Andrew Thomas]

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



Hello BP :)

As mentioned in the description, I'm an REI noob. I found what I *think* is a potentially good BRRRR candidate. Just want to get feedback from more experienced investors before proceeding.

My agent sent me a copy of the inspection report from the listing agent. Summary:

House was built about 100 years ago.
Converted to a triplex at some time in the past. 100% occupied.
Vinyl siding. Some small / finger-size holes, but overall good.
Linoleum flooring. Recently replaced in unit C.
Interior walls in Unit A are separated from ceiling. Either interior walls were built & installed incorrectly (owner / handyman DIY?), house settling, or weight of roofing (that's what the roofer thinks).
Horizontal & vertical crack in foundation wall. Inspector said related to house not having gutters, so rain puts pressure. Crawl space house.

According to inspector, will need roof soon. Currently 2-3 layers shingles, plus metal roof on top of that. Inspection said it's not clear if it is 2 or 3 layers; also due to age of home, "possibility of asbestos shingles on the bottom layer". Contractor estimated $14k-$18k, due to labor, dump fees, new roof install, etc. He thinks it is 1x6 decking due to age of home; since that is no longer code, it would also need all new OSB roof decking, which is included in that price. Some water stains on unit A ceilings, but I don't know if it is currently leaking, or old stains, if the inspector saw any wet roof decking in the attic, etc.

Lot is ~ 1.5 acres. Landlord pays mowing, and water. Septic tank(s). Backyard fully fenced with gate.

A - 2/1, $425 - window AC, long-term renter (10+ years), smoker (nicotine staining)
B - 2/1, $550 - central HVAC (1987 AC, 2020 furnace)
C - 1/1, $395 - window AC

BestPlaces says the local area has 5% unemployment, with positive job growth of 2+%. Median home cost ~$125k, w/ 8+% appreciation past year. Renters are ~ 45% of local population, w/ $750+ median 2 bed rent, $625 1 bed rent. Major employers are related to healthcare, education, and manufacturing.

Was under contract for $120k, but buyer backed out due to roof cost. Now at $80k, as-is. My agent could not really find comps, but estimates $115-120k. Has been on the market a long time (over 3 months).

So, what say youse guys? :)

[Nelson Sandidge]

Hey Andrew, 

take my opinion with a grain of salt as I am also a new real estate investor, but the roof shouldn't discourage you from buying this property. I bought an old single family home with a partially finished basement in 2020. This property had an old roof and I still bought it. You can finance the roof. I paid "top dollar" for my roof with a company called Power Home Remodeling (I'm not saying use them),  because they promised to take down the old roof and put a new one in in just one day, and I'm very happy with the way they handled business.  I've dealt with a few contractors and handyman,  and the difference shows. You get what you pay for. As far as the foundation,  get with a foundation expert. Also while you're in escrow you can get your own inspections,  some inspections are more specific to the scope of work. I'm currently househacking my property. I did a few renovations and added value to it. 

I would need a bit more information on the property like square footage of the units and the property all together.  But if you're only paying $80k and you plan to househack,  the two other units should pay for the whole property. 

Regards,

Nelson