Posted by Ronald * Starr(in No CA) on January 09, 2003 at 22:28:29:
Actually, you would probably have a positive cash flow if you rented out both units. The price compared to the rents sounds pretty good to me. However, that range of possible rents sounds too large to me. I think you need to study rents in the area seriously and see if you can get a realistic figure nailed down.
Then the price to rents ratio varies in different locales. So you need to study what similar properties have sold for and what they rent(ed) for.
You may not be ready to buy yet. At least not if you want to be sure that you are getting a good eeal. You probably need to study the local market more so that you are an “expert” in the rental rates and the fair market values of the properties. This might be a very good deal for your area or it could be a poor deal, way overpriced. Lookinag in here as an outsider, I can not tell you that, and I don’t think anybody else can–at least with a straight face. If you could look at about 50-70 other duplexes offered for sale over the next few months you might get a very precise idea of the market values of similiar properties and so buy with confidence.
Old house? Hmmmm. Some older properties are very soldily constructed, probably better than newer properties. Some may be very difficult and expensive to keep repaired. There are usually more repairs for older properties. That is seems to be well maintained is nice. However, sophisticated sellers can and sometimes do make properties cosmetically appealing, even though there are problems with the property which they do not disclose. Not everybody is honest. If you move ahead with this purchase, get a good inspection by a whole-house inspector or a knowledgeable contractor. Do not go on your own impressions, please. Houses actually are more complex than they seem, even though you have been living in them for many years. Small matters can cause big problems–such as water not diverted away from a foundation area. That age house may need some new water pipes, if they have not been replaced. Are you sure there is no old cesspool in the back yard which is thinly covered with dirt and and old rotten wooden cover? You need to check county records for things like that, or have your inspector do so.
I think it is outstanding that you are going to be buying a property for yourself at this age. I bought my first home when I was 23, a four-bedroom that I livedin and rented out the other bedrooms to help me pay the mortgage and other bills. Worked fine for me. I hope your first purchase works out well for you.
Good InvestingRon Starr**