Posted by Chris in FL on April 04, 2006 at 22:12:46:
Carl,
It depends on you and your goals. Unless there is a significant reason otherwise, I am not normally interested in property unless I can buy below value (bargains). Sounds like you can make the property work if you want to, and it may be a decent long term investment, but good rule of thumb is “you make your money when you buy”. Still, I will occassionally pick up a property I like close to value, that works okay blended with a portfolio of better bargains. It hasn’t hurt me so far, but that was in a fast rising market, too. I would be much more cautious about doing that today (though being able to cashflow it, and hold it long term if necessary, does provide you a hedge). Good luck!
Re: What do you think of this deal? - Posted by dealmaker
Posted by dealmaker on April 04, 2006 at 21:52:34:
Why is the EMPTY one worth more than the FULL one?
Why is the EMPTY one EMPTY?
How much is insurance?
Assuming the $425/mo is right for the empty unit, and $800/year for insurance, that’s about 11% ($7900/$70000) per year at 100% vacancy.
That’s about the minimum I would accept on a rental. And at that it’s going to have to be in a pretty good (low maintenance tenants) part of town. IMO, $400/month rentals are not “low maintenance” tenants.
What about management? I’m guessing you are the manager!
Re: What do you think of this deal? - Posted by Craig (IL)
Posted by Craig (IL) on April 04, 2006 at 21:23:13:
Do you want to be a landlord? Any expreince? Ready to learn? How far away do you live?
Remmber that a duplex with only one tenant is 50% vacant/50% less income, and this will happen from time to time. 100% vacant is possble to. Is the current tenant a relative of the seller? If so, you’re going to be loosing that tenant.
How does that sale price compare to others in the area. If it’s sigificantly less, that may mean a problem. (If there’s a problem with the curent owner(s), that can be good for you. If a problem is with the property, look out.) What about the foundation or other structural problem? What about zoning? Parking? Utility costs (which you may pay in part, expecially in the winter if vacant)?
Will you pay outdoor maintenance? Figure that cost and that hassle.
You say it needs no immediate maintenance, but what about in the future? How old is the house? The older it is, the sooner expensive repairs will be needed. How soon will it need a new roof? Appliance replacement? Interior remodeling someday. You may sell it before it needs anything major, but if you sell needing some repairs, you’ll sell for less.
The numbers show you can expect a monthly payment figuring 20% down: about $500/month Principle, Interest, Taxes, and Insurances. Higher, if the sale triggers upward adjustment in taxes. Higher, if you put less than 20% down. Or bit lower, depending on the terms of your loan.
So, the deal could be propitious for you, depending on how you answer ALL the above questions.