so i have a showing at a property on friday, and i’d love to run the specs by you all, and see what you think about the numbers and whatnot:
-listed on Craigslist by owners at 200k; for some reason ALSO listed on MLS at 220k via realtor.
-3 unit property,3 story victorian twin(sale is one side only) modded for 3 units. all occupied and renting at ~750-850/mo. 2 of the tenants have been there for many years and are on a month-to-month lease now. 1 new tenant.
-decent neighborhood, i walked it and it felt safe. asked a few neighbors and they said it was “quiet and a nice place to live”.
-its only 5 min away from me, so emergency maintenance would be easy.
-the owners are investors that are moving. im not quite sure why they arent holding the prop in their portfolio; she said they were moving farther away and having a kid, but she said they have multiple props in the city. (be more curious?)
numbers-wise, at 200k sale price and ~2250 monthly income, the cash flow wouldn’t be 2%, but it WOULD provide about 10% return on investment, which is good to me. i would do it as a cash deal, probably come in initially around 140k, and at worst top out around 180k. she claims its priced below comps, but they seem to hover around 170k for the same size single family layout in the area.(there are no multi-units of this size in the area).
how does this look? should i bring in my RE buyers agent? do i need to be concerned about the “double listing” aspect? do you think i should come in higher or lower? i would do this as a cash deal.
As I have learned first hand, cash talks. And in this market it not only talks - it yells. Personally I would shop for better deals since you are cash heavy like I am. I would shop for deals like that - that cost 60k or less. You will not find them on the MLS…you will need to use direct marketing in specific neighborhoods.
The other school of thought is for people to not sit on the sidelines.
While I’m sure you could find a similar property for 60K, If a first-time inverstor waited for that kind of deal, they would likely never get in the game.
Note: I’m fairly new, my properties are cheap, and cash flow very well. I have yet to learn and use the marketing techniques people advocate here.
That being said, in my area, I can find a bit better deals on the MLS. Cash speaks, maybe you can negotiate price.
In my area cash flow like that will cost $100k. I’d wait, or keep the cash and get it with a loan to improve the return and still have cash sitting around to wait for a better deal.
If there are 3 units on a side and you buy one side, there are going to be 3 tenants in your building that you have absolutely no control over, in any way, shape, or form. I can see a lot of possible problems with that.
Are the units legal units? If not, they are worth very little.
I have no idea whether it is a good buy or not, since I don’t know your area. In fact, you don’t give an area.
Unless you live where motivatedceo lives, it doesn’t do you much good that he can buy a 3 unit for $60,000. The question is: can he buy a 3 unit in the town and type of neighborhood that you want to invest in?
The market is soft. Never pay asking price. Go for blood. You can always raise your offer later.
The legality of the units is a good point.
Get something on paper stating it’s legal. Having the current owner dig up paperwork showing it’s been rented long enough to be grandfathered works in my areas.
In my area I notice a huge price difference in units that are zoned multi-fam, those that are legal: non-conforming (grandfathered), and those that are illegal conversions.
When the owner has a zoning certificate asking price is often more than double or triple what the illegal places are. (In my locale)
also check if these is a HOA or rental restriction. you mentioned this is the only multi-family unit, so shouldnt be a problem, but I will just double check.