Author Topic: thoughts on property?  (Read 674 times)


  • 5 O'Clock Shadow
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thoughts on property?
« on: September 16, 2018, 01:20:51 PM »
I'm brand new to the notion of landlording, but interested, and just noticed a $265,000 triplex for sale in the neighborhood I'm interested in: good schools, inside a city and near the hip part, house prices increasing, most nearby houses are much more expensive and other local landlords have reported no problem finding tenants within a few days. This one is lovely at 100 years old, but seems to need a lot of of renovation work (last renovation was in the 1960s!) but is at least in good enough shape that it's currently fully rented. There's a lot of details about the work it needs that we don't know yet. My partner and I have cash for the down payment, and other $ we could access from stock sales for renovation work. Our combined income is about a little under 100k per year before taxes but we're low-spenders. I'm interested in getting a mortgage before rates go up, and diversifying.

We could either live in one unit and rent out the others or rent out all three. (We currently rent, but with a VERY good deal for our location that we've been reluctant to give up, and in a place we love; this would be moving 45 minutes away, but wouldn't affect our commute since both work from home). All units are one BR/one bath; stand-alone 1 BRs nearby rent for 900-1200. I don't yet know the current rental prices for the units. PITI calculator suggests overall mortgage etc costing $1273 per month, which is what we're currently paying in rent.

My question.... obviously there's a lot more to learn, but should we even be thinking seriously about this property? It seems like a good deal but of course it might be a money pit. Or is it nuts to think about starting with something requiring so much renovation when we're inexperienced in that world and not particularly handy? Are there serious costs I'm not considering besides renovation and upkeep, or ways you suggest thinking about that? One red flag on the sales history is that a deal at the same price seems to have fallen through this summer.

Thanks for any thoughts!


  • Magnum Stache
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Re: thoughts on property?
« Reply #1 on: September 16, 2018, 07:30:40 PM »
You should certainly be gathering information!

Things to keep in mind:

-Multi-family appreciates less than SFH in general. So if you go the house-hacking route, you'll want to think about the possibility that you won't want to live there anymore (1 bed/1 bath won't be fun with kids) - will you want to hold onto the place purely as a rental? For a house hack, you don't need to hit 1% or 2% rule numbers to make things work out great - but this might or might not work long term as a house hack.

-You need real rent numbers. Go knock on the door and ask. Often you can get great info that way. You also get a chance to assess the current tenants. Are they nutbars breeding pitbulls for dog fights? Are they married grad students?

-If you can get in to look around, do it. If you've got a contractor/GC friend, get them a case of their favorite beer and bring them along. How much will it cost to update to the standards you want? How much can you DIY?

-Do you *want* to move away from your totally sweet current digs? Would you want to live in this area?

IMO house hacking is pretty high up in the hierarchy of Mustachian no-brainers. But you have to do it right, because buying rental properties is a pretty different thing and if you'll be unhappy living there, then it's not a house-hack.



  • Handlebar Stache
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Re: thoughts on property?
« Reply #2 on: September 17, 2018, 08:48:24 AM »
At first blush it looks promising.

Things I would have on my mind that may need to be updated and can be expensive on a house with deferred maintenance- HVAC, plumbing, electric, roof, sewer. Also what legislation there is regarding asbestos remediation in your city. All this stuff is much less fun than the cosmetic improvements but is what I think catches some people new to real estate unprepared and leads to "money pit" labels. Presuming there is no current mold/water leaks and the foundation is okay, it's probable that some combination of the above is what made the property fall out of a contract.

Find out if the utilities are sub-metered, billed back to the tenants or paid by the landlord. If the utilities are included in the rent and the building is older with poor insulation, this can take a big chunk out of your monthly rental income.