On my current 5 unit real estate deal, we discovered that the single family home that was a part of the deal had serious structural damage. This is the value that a quality home inspector will bring you. The damage could easy cost $30-40k, and the deal just doesn’t have enough built into it to support that kind of a campaign.

Now, the 1 bedroom apartments that are next door have been locked by the contract. Because of one water meter servicing the 1 bedroom duplex and the single family home, the seller can’t really sell them separately. So since we are still in the option period on this contract, we will have to drop those 3 units. Now, what I will likely be proposing to the seller, is to provide us with a separate water meter, and we will proceed with buying the duplex.

The key take away from this article is that you must not get emotional when dealing in real estate (really any kind of business for that matter). Getting emotional will get you burned. The house is too far out of line with numbers that make the deal work, so we will have to walk away from it. So if we only end up with 4 units out of this deal, that will be perfectly fine, and it will still provide strong cash flow.

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