I have owned a business for about 9 years and am getting a little fried. I have been looking for something else to get into and would like some advice on whether or not it is a good plan. I have completed the Mass. real estate course, and will be taking the test soon, the purpose is not really to sell but to save a little on commision when buying and selling.
Anyway what I would like to do is to buy existing 6+ tenemant houses in the area, convert them into condos and attempt to sell to the existing renters. In our area these units are abundant, right now, there are over 150 on the market. The city I am pursuing is lower income therefore many of these folks are destined to rent forevor. With houses costing at least $250,000 most of these folks will never be able to own anything. However if I am able to buy a 6 unit, for around $320,000 (which is very doable) put another 12 to 15K into the property for the conversion, and sell each unit off at 85K, will it work? Normally 2 BR condos are going for 105 to 125K in this area so they will be purchasing below market value. My lender is going to be working on no money down programs to the client to finance them so essentially they will be able to move from a rent payment to a mortgage payment seemlessly.
I am hoping that some of you more advance folks will be able to pick out flaws in my plan. To purchase the properties, I have a private investor who will finance the entire project at a 1% origination fee and 10% deffered interest, with a payoff target of 12 months.
Thanks for any advice or insite you may have.
Joe Pacheco
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