Rehab To Rent Or Sell?
Hello all - my first time posting here, but I've enjoyed reading all the old posts & archives.
I've found a beat-up 4plex for $460k in a really nice part of town. This 4plex is definitely the worst building in this upscale neighborhood. Two lots down, a developer recently demolished and built 4 new townhouses that sold for $440k each ($1.7M total).
If I buy this 4plex and put in $30k to rehab it to livable condition, I can probably get $600 in rent per unit ($2400 monthly). I'd still be slightly cashflow negative but the property value would increase to probably $550k-$600k and I can probably flip it within 6 months.
Alternatively, I can buy it but skip the rehab, and immediately demolish it to build 4 new units to rent out or sell. If I build new townhouses, I'd have to get the right permits, find construction financing, find a builder, etc. I think I could sell all 4 units for $1.3 - $1.5M but the project would take 12-18 months.
Thoughts?
pay me now or pay me later. if you are sure of your numbers they both look good. it depends on what you want to cash out now or hold you have to make that decision...km
What are your total projected construction costs and how long do you wish to hold on to this property?
If you're familar with property management formulas, do a life-cost analysis on each scenario.
-Nick