In order to tackle something like this, you need to determine (to a fair degree of certainty)what the rental market is for these units after restoration. Are there other similar apartment units now being rented in the area? At what rent? What are the problems with the area in general?
Next, pin down the repair costs. You need a good contractor for that.
Third, investigate the financing possibilities through the HUD 203K loan program, and other city and state programs that might be available through banks. The realtor ought to know what these are. Sometimes you can get outright grants for restoring properties in certain areas.
After you have this information, then analyze the deal to see if you can make money on it. Keep in mind, that rental units like this are management intensive, and that’s how it got into the shape it’s in now.
Posted by Tony Natoli on February 16, 2000 at 05:17:10:
Here’s the deal:
I found an old abandoned apartment complex downtown. It is in need of VERY extensive repair. It has 4 units 3 rooms each. It is listed with a realtor. Here’s his words:
“Retired lady moved to FL and leftt him all of her properties to sell. This is the last one. The roof leaks, some floors rotted, extensive overhaul, no asbestos. Asking $25,000 but will take $17,000. Land value around $20,000. Government assistance available.”
I’m sure she’ll take less than $17,000 but even at that it would be a great deal. He said something about gov’t assistance but not really sure what that means. It is in an area that would make a great office for a lawyer or doctor. But it would also make a GREAT rental unit. I’ll need money for repairs because I think it will probably take somewhere around $20-25,000 to re-hab. Not really sure.
Posted by Bill K. - FL on February 16, 2000 at 09:16:31:
Hi Tony,
Just a few general comments. There is a reason(s) why this is the last one of the ladies properties for sale. Evidently this one has been passed over by other investors who bought the other properties. Sounds like one of the reasons is the condition. If you are not experienced at rehab I don’t think you should learn on this one. You could bring in an experienced partner though. The other reason it has been passed over might be the location. Who lives downtown now? What is the economic climate. Lot of vacancies, vacant storefronts, run down properties, or is it on the upswing? Don’t be a pioneer and figure you are going to change the area. Let someone else get the ball rolling and then buy. Educate yourself on valuing, buying,and maintaining rental properties. Also if you think you want to be a landlord first go to www.landlord.com you might change your mind.