Rental Property - MLS 21112686 - Deep Dive

I checked out the property with my agent on Friday after work and overall it was a good discovery trip.

Prior to the visit my agent already gathered information regarding this property's history, and we were able to confirm the facts as we walked through this Main House + Guest House rental property.

The Good: The exterior of the house is built of brick and overall the outside condition o the house looks solid. In the main house the living room has a nice solid wood floor, the kitchen cabinets have been remodeled, one of two bathroom looks renovated, and the two houses are completely detached with separate entrances. This place is zoned R3 so the guest house is permitted (awesome).

The Bad: Somehow my agent was able to obtain a copy of the inspection report from the prior buyer who eventually bailed from the deal (we are assuming the inspection report has something to do with it). Come to find out there are some major ticket items that needs to be fixed prior to closing: there's a mysterious leak in the gas line, water pressure running low in the bathroom facets, hack job electrical hook-up potential for major hazard, and the guest house needs major renovation before it is presentable to renters.

Bottom line: The original estimate of $8500 for rehab would not be enough which means the cash-in would be greater than estimate which inevitably pushes out the break-even point of the upfront investment. The rent potential is great; in fact I already have 3 people respond to my pseudo craigslist ad ready to pay $1550-1600 for both units together. A deal like this house may be hard to come by in the near future. Worth going for it? Your call!

Photos:

Deal of the Day - Rental Property - MLS 21112686

I've got an awesome real estate investment team that I'm building in Tucson AZ; apparently Tucson was ranked top 10 out of the nation for having the best property value growth potential 2011-2012 if you didn't know that from reading CNN Money.

Here Try This: Positive cash-flow ready investment property (short sale) that can be bought, rehabbed, and rented. CFBT (Cash flow before taxes) is at $6800/yr for the first year (which includes rehab costs) and gross operating income at $17,000/yr.

The Scope: This Tucson property has two units on the lot (3BR/2BA Main house and 1BR/1BA Guest house). Built in 1948 this mostly brick house is approx 1670 sq-ft on a 10,100 sq-ft lot. Cool thing is this property is adjacent to a shopping mall, off of the main street with bus service routes, and stone throw away from a beautiful park and the University of Arizona. It is as described by my real estate friend a near perfect location at the center of town that can attract families, grad/med students, and maybe even some junior/senior year undergrads. It is however a short sale property that apparently went on the market for $179k late last year and due to a discover of bad gas lines, the previous buyer backed out of escrow. Since then the price has dropped to $151k and apparently that's what the bank will accept (pre-approved). A little digging into the property shows that the house previously had occupants that were accused of running drug trafficking but the neighborhood seems to be rental friendly.

Check out the attached spreadsheet for more detail breakdown of assumptions of calculations:

What's Next: I scheduled a time to visit this property tomorrow afternoon. I'll take pictures and hopefully speak to a knowledgeable rehab contractor while I'm there.