What Do You Think Of This Deal??
I would like to get your opinion / suggestions on this deal:
8 plex a few blocks from Beach. It was built in 1924, have 2/1 units with hardwood floors and fireplaces. 4 upper level have vaulted ceilings. Owner claims has been well maintained. They disclose some termite damage a few years a go which has been repaired, and is now bonded. In looking at county records, the last permit pulled was in 1991, so nothing major done..or at least done with a permit.
Current rents are $500 x 7, $450/mo. Market rent is $600/mo. Owner has not been increasing rents. Leases are 1 year, but do not have end of term for each lease at this time. Vacancy rate is 5% in that area.
Operating expenses seem high at $21512.
(Taxes $4754, Insurance $3500, Utilities $6720, Repairs/Maint. $1800, Contract services $1584, Supplies $2000, License/Permits $204, Misc $950)
It looks like they are paying utilities, which I would try to move to tenant ASAP.
Tax value $194,716
They purchased in May 1989 for $210,500
The area is in the middle on revitalization. Realtor was not able to pull comps, as nothing is showing in MLS. Tax records show some sales in area, but I have not had the time to pull each one up individually to get details yet. The area consists of Single family, other small apartment complexes, as well as Office/commercial.
Based on this, what would you offer?
What are they ASKING for this property? Taxes and Insurance seem pretty high as well for a 200k property. Cash flow could be there, depending on the asking price. Bit more info please.
If they are asking around $300,000 and the market has good upside potential I would look seriously at the property.
Big questions - differed maintenance, CURRENT insurance quote, type of contruction, ( I am assuming frame)
Can you go condo? ( Big profit here)
Are there seasonal tenants ( Hassle)
Gregg
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