Hello everyone!
I'm looking to do my first house hack with no previous landlord or investment experience. I currently have the opportunity to buy a fourplex from another investor. I'm trying to discern if I should be afraid of this property or not. Or, if a somewhat unorthodox fourplex is a good idea for my first investment. Below is a brief description of this property in question.
The house isn't currently on the market, but he's directly given me the opportunity to buy it. It started out as a large single family home and has been converted to a fourplex. Each unit is one bedroom, one bath. The units are in typical rental condition (Maybe slightly rougher). The walls have layers of paint, carpet was dirty, and since the house is a little older the floor has settled and warped a bit. Think typical old floor that isn't perfectly level in all places. The investor has recently replaced the roof, siding, and windows. It currently has an older deck on the back that acts as a fire escape that would need attention relatively soon. The house only has one furnace and no central air. The controls for the furnace are located in one unit and are locked at a generic setting to suit all tenants. The tenants currently provide there own window AC units. It's in a nice safe area that I would be thrilled to live in.
Now I'll go over some of the financials.
Price of the property: $120,000
FHA loan payment: $1000 (Rough estimate including loan, insurance, PMI, property taxes)
Current rent per unit: $550, 550, 600, 600. (With some improvement rent could maybe go higher)
Basic utilities are covered by the landlord (electric and gas). Rough estimation: $200 - 450
Gross property income: $1700 (assuming no income from a fourth unit because I would be living there)
Payments and utilities: $-1450 (at max)
Cash flow: $=250 (Give or take depending on utility cost, time of year, vacancy etc...)
As a new investor and landlord, should I be afraid of this property and the somewhat unorthodox nature of a single family / fourplex conversion house? Also, the current investor has owned this property for 15 years. So that seems like a good sign to me. I would think that if it was a bad deal or a negative cash flowing property, he would have gotten rid of it a long time ago. Is this a fair assumption or am I being to optimistic?
