I'm under contract with a 3-family home in CT. We settled on 150k, a little higher than I hoped but all I was aware of it needing immediately was a new boiler heating system for the second floor unit (as the current one has been broken for 15 years and the current and long term tenants have been heating their unit with space heaters ever since), and a spring porch rebuild. I am using a conventional loan. The house is 3,124 sq ft and can rent at $950-1000 for units 1 and 2, and $650 for 3rd floor unit. Mortgage will be around 1400. Currently 2nd unit is at $700/mo including ground keeping, 3rd unit is at $650/mo, and I'll be owner occupying 1st floor unit). The seller inherited the property and apparently wants to just 'unload it' however is very rigid on the price and not doing any additional work to the property. She is having the flooring in the first floor unit redone due to termite damage. (New or old damage and current infestation will be confirmed by pest inspection Monday) I had inspection, and a fire marshal inspection and there are a list of additional things that need to be done: Porch railings on every floor are under code height (need rebuilding), Railing in stairwells, paneling in front stairwell removed, Second floor heating system, Asbestos piping in basement covered, entire house needs a gutter system, roof has possible 3 layers ( 12 years old per disclosure, however no permit showing up online for when this was even done, will call city hall to confirm this week), fire doors, CO detectors, lack of proper amount of smoke detectors, sprinkler over dryer in basement, possible active fuse box on 3rd floor, the floor joists that were 'fixed' from termite damage are not sistered properly. These are the main concerns which before my specific itemized calculations, I'm estimating about 15K or more to fix these issues, (excluding the roof). My feeling is she will not want to fix any of these even minor issues, and will also not budge on pricing. I've run the numbers multiple times, I'm just having trouble deciding if for my first ever property, it is smart to invest in such a project that requires so much immediate maintenance for a large price (assuming she doesn't budge) or if regardless of what property I get I will be running into many projects and just need to assume the first few years will not show a return. Also, more importantly, although I have a conventional mortgage, will the timeline in fixing these issues, cause a problem if I had to use my homeowners insurance? Example, if there was a fire, and I didn't have the fire doors in place yet, could they not cover the damage due to lack of updating that?
Once my inspection report is completed I plan to also attach an itemized list of necessary repairs and price break down for the seller, and hopefully spark a negotiation. However as I said, I'm not confident she'll budge on property price reduction, or that she will agree to undergo any repairs.
I know these are a lot of questions, and the decision may seem obvious to some, but that's why I need some input! I'm very new to the real estate field, and as this being my first potential property, I am hoping for some input on if I should push forward and get through the initial demanding maintenance, or look for other properties instead.
Thank-you!
