Well, when I began asking about the baseboards it was for a totally different building. So we have 2 scenarios.
Scenario 1: Four Family Bondhill, OH. LP: $80k
This building has just been down right neglected. It's free and clear, but all 4 units need new kitchen rehab, paint, new carpet, windows, and fumigation (roaches). Since I'd be rehabbing, I'd probably switch out boiler to baseboards. The windows are old case windows, so would replace at least the "broken one's" in the beginning and slowly do it over time. I'd ONLY by this building for 25-30k, and it'll cost me about 30-40k to get it in a respectable condition.
The Pro's:
1. The owner has the property free and clear. She is an older lady and just wants OUT of the building.
2. The rents are undervalued by $50-$75 a unit. They are currently avg $425 a month, should be $500 (but since they all look like crap, I understand why).
3. All have individual washer & dryers in the unit, I'd remove them, sell for maybe $25 bucks and replace with coin laundry to generate more income and REDUCE water bill.
The Con's
1. Old building, need to redo the electric, about $3,500 bucks.
2. Tenants most likely would need to be evicted because they've gotten away with murder with late rents as well as just piss poor self-maintenance of their units.
3. Unforeseen damages when we start to rehab
4. Owner not honest about rents. She refused rent rolls, gave me false rent rates. I found this out when I inspected individual units that were occupied. 3/4 units are still occupied.
Scenario 2: Four Family - Golf Manor, OH
Great neighborhood. Block of mixed duplex, SFH, and 4 Family. Rents for 4 family on higher side are $500 1BDR, and $500 2BDR. Totally vacant. All windows have been replaced. Hardwood floors needs to be refinished. Kitchen facelift, replace cabinets and counter tops.
Bathrooms all need facelifts as well, replace tubs, toilets, and sinks. They just need to be modernized, but I can keep them all the same and save on up front bulk buy PLUS maintenance.
This is the building that had all the radiators looted. So, was debating on either putting in separate furnaces and duct work to the old "now empty radiators" or simply update some electric and make runs to some new baseboards. I figure if I have to redo a boiler/radiator system, it would be better to future proof it and change over the heating system.
I have this seller willing to take $60k for purchase and my contractor has me at 20K for rehab. That also includes a fudge factor of 15% and holding cost of 90 days before occupancy.
Pro's:
1. Very good neighborhood that nets higher rents than other urban neighborhoods.
2. Rehab building up front to help reduce expenses and make more appealing for better quality tenants. Leading to less turn over, management, and increasing cash flow
3. Easier to sell as turn-key solution with a good PM company in place.
Con's:
1. No tenants at all, so no income at all when assuming ownership.
2. Greater risk with vacant building. Only options for financing are HML or private lender. More pressure to stay in budget, on time, and fill building to begin "seasoning" and conventional re-fi.
