Market Value: $400,000-500,000? (In excellent condition, it would be 600+).
Original Purchase price: $215,000 (1997)
Term remaining: 0
Amount remaining on mortgage: $0
Gross Rents: $52000/yr (10 small units, rarely vacant)
Taxes and Insurance: $15,200
HOA costs: 0
Deferred maintenance notes: YES!!
1. Historic building in historic district (rental market is absolutely on fire right now). Repairs (see below) require lengthy approval process and can probably be done over 3 years.
2. City Assessments:
a. Need to fix replace box gutters/soffits, including decorative pieces, and maybe parts of the roof infrastructure. Its a big project. Lets say this will cost 50k.
b. Fire escape needs replaced (20k ??).
c. Assorted concrete and painting work (10K)
3. My parents own this building (in their names). They are retired and dont want to deal with it anymore. They want to sell they werent happy with the letter from the city. I fear this is a bit rash.
4. I live near the property (and my parents) and want to take over management and oversee repairs. I grew up in the neighborhood and think I have a good feel for the market, rents, etc. I'm currently getting estimates and putting everything together to present to my parents and brother to make the final determination.
5. I also want to move the property to an LLC owned by my parents, ensure it flows through a living trust, etc. Ill run it and take a small salary. Eventually my brother and I own 50/50.
Questions:
1. Seems like a no-brainer to do repairs and keep. I think 100k is the max repair bill. Thats high but still only 2 years of gross rents. Right?
2. Thoughts on paying for it? We could self-fund with a loan (commercial equivalent of a HELOC?) We could look for equity partners, etc. I don't want my parents to cash out retirement accounts to do it.
3. Thoughts on conversion to LLC? Ill have a lawyer set it up and work through the Operating Agreement - how should ownership be handled? Up to my parents if they want to give us some, I suppose. It's intertwined with their finances and I don't want to mess them up.
Thanks for reading!