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?