All Forum Posts by: Corey B.

Interestingly - just beside it I also looked at this weird situation.

One deed

Two parcels - we'll call them parcelA ($25K list), parcelB ($40K list).

On parcelA, there's a home (we'll call it building1) that was converted to duplex, one downstairs, one up - so two units. On parcelB, there's a 3 BR SFR (building2), as well as a small duplex (building3). Building1 needs ~$8K (carpet, paint, kitchen basics). Building2 probably needs $25K. Building3 is rented already.

So 5 doors if I get them all fixed. The owner is saying she'll take $45K for both parcelA & B & the 3 buildings - and I didn't even ask...this is what they volunteered...wayyy below list. Given this, I'd come in at $35K & put $35K into them.

So this deal would be $70K with about $7K annual back, using some know tax/insurance/water assumptions. I just don't know how I'd structure the loans, given the small amounts & the rehab funding needed. 

Any ideas on that?

Updates here... On the market potential there - even though it's a stagnant mostly rural area, evidently there is a relative shortage of rental properties, and a relative surplus of folks who don't qualify for a mortgage or can't save for down payment. So there's tons of renters.

I saw the property & two of the 8 apartments. It's not terrible or war zone, but it's not fantastically desirable either. The 2 apts I saw were functional but not attractive or updated.  The tenants who are there have been there for 10-15-20 year range. The slate roof looked mostly ok but had some patchwork repairs I could see even with inexperience. No A/C in the building. Baseboard electric heating. I found out I'd be covering water, which was a ding to my numbers. Windows seemed functional but could use updating. Brick looked good. So updated #s.

$95K list

Purchase & term assumptions - $85K purchase, 25% down, 5.5% 15 year amort. 5  year balloon, $3500 closing

Income - $2900 monthly rent

Cost assumptions - 8% vacancy, 15% maintenance ($5220 annual), $3500 insurance (guessing), $2200 taxes, water $3600 (guessing), mgmt $3480.

$7600 annual cash flow.... which is 31% CoC....but just under $80/door.

Seems like OK cash but as @Ken A. mentioned - large headache quantity. 

What do others think?

Small town NC. Building from 1940s, divvied up into 8 apts - four 2/1, four 1/1. 7 are already rented. list price is $95K, but hoping to get for less. Local Bank will do 75% @ 5.5%, 15 year amort. w 5 year balloon, roughly $650/month payment.

Rents on 2br are 375, 1 br is 350, so about $2600 income monthly now but closer to $2800-2900 with all filled. 

Maintenance I'm sure would be brutal but no matter the numbers I run, everything looks good about this, even if it's low $ per door. Main concern is the area and exit strategy - the town is small, rural, and not growing. 

Advice welcome!

Is there such a thing? I live in a good area (central NC) with great economy, jobs, and so on. About 2 hours away I'm looking at a deal for $35-37K home that has been modified to have 2 units, back 1 BR, front 2 BR. The listing says long term renters are in place and rents total $600/mo. 

The issue that gives me pause is the economy 2 hours away in this area is pretty terrible. If the renters went away, the pool of renters is *much* smaller and nothing in particular would bring folks to this town other than folks who are already there.

I would need to find a good manager in the area, and also I'd like to put just 20% down and mortgage the rest, but not sure if the banks will do such a small 30 year term....maybe a local bank or credit union?

Other thoughts? BTW first post, and I'm new to BP.