Great Deal Alert
Every now and then, I am able to create a relationship with a seller that results in a unique opportunity that only I know about. And then I share it with you. That just happened this week. Here’s the summary:
The seller, who is also the agent, put the property on the market for $1.8 million. It will never sell for that price because it is way too high. The seller priced the property based on certain assumptions that are untrue. I took the time to educate her on the rules and regulations that apply and now she understands. Based on our conversation she is now prepared to sell the property for $1.3 million, which is a price that does make sense. She has not reduced the price on the MLS, so I am really the only person who knows it can be had for that price.
Without giving too long-winded an explanation, there currently exists two awesome vintage character single family residences on the premises. a 4 bed 1900 sq ft home and a 3 bed 1400 sq ft home. One needs some work; one needs a lot of work. Once that work is done they will fetch rents of $6K/mo and $4500/mo. There is a duplex in the rear of the property that has two 1 bed apartments. They need some work and will fetch rents of $2250 each. And, finally, the 1000 sq ft garage can be made into two 500 sq ft 1 bed ADUs that will also fetch $2250/mo. Everything will be delivered vacant. This all adds up to a total of $19,500/mo in income. Having spoken to two contractors I have the renovations at approximately $600,000. Add that to the price to acquire the property ($1.3mm,) and you are at $1.9million ‘all in.’ But the rental income will be $19,500/mo, meaning you will have excellent monthly cash flow on a very stable upside property in a very good Highland Pk location with plenty of parking and plenty of outdoor space for the tenants to enjoy. By my reckoning, a very conservative estimate is that you will get $5K/mo in cash flow with a cash outlay of about $500,000 if you finance the renovations. That is a whopping 12% cash on cash return!
Call me if you want to know more.
