Potential Property Four #6

Last week I went to take a look at a new property, Potential Property 4 #6. This was a Vacancy Bank property, like Damon’s. It’s a 4-unit building going for $12,000, but I’m sure I can get it for $5,000. The area is good, and part of the city’s development of the Westside of Smalltown. With the price so low and neighborhood so good, I knew the place was gonna need work but…

A building that anyone can tell has had a bad run of tenants and mismanagement

What used to be a bathroom

What used to be a kitchen

Jesus

Just about all 4 apartments look like this

Good mercy. The pictures, by the way, do not show the stench of that place. I mean, it was bad. From a personal point of view, I wanted to get out of there as fast as possible and run for the hills. The investor in me, however, was salivating. The numbers were running through my head about how much would be needed for repairs, and I estimated around $120,000:

Roof: 20K
Siding: 15K
Interior Work: 80K (20K per apartment)
Extra Costs: 5K

I would do the roof and the siding first, and then the two upper apartments. I would then rent those two out as the contractors work on the downstairs apartments. It’d take 2-3 months depending on the weather and the reliability of the contractor. If I can buy the place for $5,000 and get a rehab loan for $120K with 20% down, the mortgage would be around $1200 a month with taxes and insurance added. I would still make a profit of at least $1,000 a month if I get each apartment rented out for $600 a month (600 x 4 apartments = $2400. $2400 - $1200 ((mortgage)) = $1200.)

So? What do I think? Good project, but I don’t think I can handle a project of that size right now. Property 4 has to be something simple. Something that I can buy and make money immediately. PP4 #6 will take a lot of work and hassle to get ready before winter comes. Maybe after retirement I’ll do it if I have enough money and feel like taking on such a task. But not right now.