Originally posted by Frank Adams:
I wouldn't walk down the street to look at this "deal"
Fire is one of the hardest repairs, as far as getting an accurate estimate of what went on underneath. And of course you have the water damage on top of that.
One unit is UNRENTABLE, and what happens if she lives to be 106?!!! The other unit is $1300-$1400/month. I can easily see your repair costs exceeding $150K, as fire damage also often requires EVERYTHING in a house to be brought up to CURRENT CODE.
frank
I should have added that I've seen some pictures. Structurally, it looks ok. I would be doing some of the work myself. I would get someone to do the roof and siding. The rest I would be involved in.
I ran some numbers and after repair, I would just about break even renting the 1 apartment. I’ve estimated loan payment, taxes, and insurance to be $16,117.64 per year. Renting just the one unit for $1300/month, which would give me an annual income of $15,600? This would be my first REI and I would also be creating an LLC. The $518 difference each year would be offset by depreciation and other business write-offs and tax benefits.
Assuming I would rent the 1 BR for $950/month after she passes, my annual income would jump to $27,000 with all expenses being the same. That would give me a positive cash flow of $10,882.36 per year. Since I’ll be doing most of the updates now, maintenance for the first 10 years should be minimal.
Now, like I said, I haven’t physically seen it yet. I’ve only seen pictures. If it costs me $50,000 - $75,000 in repair costs, I could handle that. Of course, repair costs could skyrocket if there are problems that have not been mentioned. That would be determined by a visit and a home inspection.
Given my description above, isn’t it worth a visit?
