Author Topic: Three Family Opportunity Evaluation  (Read 416 times)

matchewed

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Three Family Opportunity Evaluation
« on: March 13, 2017, 06:32:10 PM »
So I live in the neck of the woods with many three family up/down units around. There is one which showed up on the MLS for $115k (HUD home). In my area if there is a solid similar property it will go from $200k-$230k. Here is the nitty gritty.

  • Town Assessment - $140k
  • Town Appraisal - $200k
  • Last Sold - $230k in 2014
  • Taxes - 7k/yr
  • I'm planning on bidding as owner occupied with a 30 year conventional for $160k@ 3.625%, making it a $584/month (7k/yr) mortgage payment.
  • Repairs - this one is a tough one as we haven't had an inspection on the place but some of the filing paperwork suggests there are no structural/roof/heating/electric/water issues, but I'm conservative so I'm thinking $5k/month for the first 3 months in order to get all the units clean/equipped/painted...etc.
  • Rent - $1100/month for each unit

I'd be doing my own property management and would plan on fully renting out the entire building in a few years. Other than the big obvious unknown risk of something being wrong that I can't detect is there anything else I'm missing? Does this seem like a good buy? My spreadsheet says yes and that I'll be getting 7% cash ROI with two units and living in the third and that I'd be getting nearly $14k/year in income from the property with three units rented out. But I'm getting a bit emotionally charged on this one and want to make sure I'm seeing things clearly.

I understand the HUD process can be hit or miss so that is a potential source of having this shutdown. But what glaring uh oh's are out there?

matchewed

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Re: Three Family Opportunity Evaluation
« Reply #1 on: June 19, 2017, 12:28:57 PM »
So we pulled the trigger. We're about 80% done with fixing up the first floor for occupancy. We didn't take any before pictures but I'm going to start documenting our journey here. I'll post some numbers and photos as things go along.

The quick and dirty. Won the bid on the home for 169500 with a total of seller pay ins of 15000. So in all we just bought a three family home for $150k. It will be owner occupied for now but we've looked at local rents and we can get $900-$1200 in our neighborhood. So short term fun for fixing up but I imagine within a few months we'll be in a good position. For now we're just using job income to cashflow the repairs.