I am going to invest in my first rental property this week and wanted a little guidance. I think I can get the property at an acceptable price, but here are some extra questions.
- The property was foreclosed and has been vacant for about 1 1/2 years. How can I tell if it’s up to code? Do I call the city inspector before I put in a purchase agreement?
- After I purchase it, what needs to be done in order to get my first tenant in (all that is needed in two of the units is paint and carpet).
- Is starting off with a 3 unit too much for a beginner?
It is much smarter to start with single family houses. Is a 3 unit building too much? There’s one way to find out!
Thanks Iron Range for the input and here is the deal:
3 Unit House (2 - 2 bedrooms & 1- 1 Bedroom)
SEV (state eualized value) is $57,200 (I think this equates to a retail of aprox $130,000; 57,200 x 2.2, is this correct?)
Their Asking price - $75,500
Repairs should be aprox. $10,000
Taxes are about $4,000 / yr.
I believe it should rent easily at $550 per 2 bedroom & $350 for the one bed. Total = $1,450
I have excellent credit and the repairs should be right on. The property was owned by a bank and were asking $150K a few months ago, but they want to drop it.
Does this look like a deal?
- Does your rent figures include utilities?
- Have you discussed with anyone what your interest rate will be on this place? How are you getting the $10,000 (loan, credit cards, money in bank, etc.)
- How much are you putting down. More down will mean a lower interest rate, so I just want to know what kind of interest rates we’re looking at on both the property and the repairs.
If the deal doesn’t include utilities then this place won’t make you rich, but isn’t too bad. If it includes the utilties then walk away, it won’t work.