Thanks all. My parents are aging and my dad no longer wants to deal with the property. He also wouldn’t mind money to pay for some medical expenses. Also he has been undercharging the current tenants.
1) The property is a 4/2 sfh in Ettrick, VA across from a university. This is a small town near Petersburg, VA (a lower income small city). There are many investment properties in the area.The property also has space adjoining the detached garage - 1/3 was much earlier converted to an office but never rented out, the rest of the space is currently storage.
2) He was offered $90,000 upfront with payments of $350/month for the next 13 years (totaling around 145k) by an investor which is what sparked him to want to sell it. I basically was offered the same or just upfront $125k (I guess this is the daughter discount).
3) I do not have an updated appraisal yet but the county assessed it at around $188k recently. I looked at nearby houses on Redfin that sold but the most recent was big by the same investor for $125k for a 3/2 sold by an older neighbor who hadn’t done any updates. Other houses have sold for $210k that have been updated and one fully rehabbed for $255k but that was August 2022 and I’m guessing prices would be slightly lower now.
4) the house is 70 years old. My dad has updated electrical in the house and added a sump pump for the basement. The basement is my biggest concern but it seems the addition of the pump has kept water from collecting and a friend in construction suggested some landscaping could be done to direct water away just based on pictures. Other than that there are some non cosmetic repairs under $5k that my dad mentioned. I would want to update paint and flooring in the kitchen and bathroom and probably update cabinets in the kitchen.
The garage space would need more cosmetic updates to rent as an office or addition of a full bath and kitchenette to be an apt but currently it can only be rented to people in the same family as an apt because it currently shares the water pipe with the house. I would like to see if something can be done about the water to open up options.
5)my dad has been severely undercharging his tenants bc he didn’t want to find new ones at around 900. He said he could get tenants around $1200 and I see houses listed from $1200-$1700 in the area. I was also interested in possibly renting to college students. They pay what equates to $800-950 a month per student for 4 bd/2ba at the closest university affiliated apartments and on campus. It seems like I could charge more than for a single family but there would be higher turnover and possibly more damage.
6) If he’s selling it, he would ask the current tenants to move- they’re currently month to month. I wouldn’t want to keep the current tenants for various reasons.
7) I would have to do a heloc for the down payment. If I just do upfront for $125k then it would be $31,250 for 25% down. With the other option, $90k upfront and then $350 monthly payments for 13 years after, I’m guessing that I would have more problems getting a mortgage or with refinancing later, especially since this is not arms length. If necessary, I could put the whole $90k on the heloc. 90k covers my dad’s mortgage and tax.
My dad wants to know if I want to proceed by Monday. He said I could do an inspection after deciding. Also I’m out of state so would hire property management. I do have a brother and cousin who can help me keep an eye on repairs.
