Posted by Antoine (GA) on December 18, 2003 at 13:19:30:
Joshua,
You need to tell everyone how much the house is worth now, how much are the repairs, and how much will it appraise for after repairs? Also, what is the market rent for similar property? Also, do not forget about insurance, taxes, vacancies, and other maintenance when calculating your cashflow.
INVESTING IN DUPLEX - Posted by Joshua
Posted by Joshua on December 18, 2003 at 12:47:52:
Hey everybody
question for everyone
my partner and i are looking into a duplex. oh yeah we are both beginners in the investing game. the duplex is found in a somewhat decent neighborhood. the owner wants 49,000
10%down and he will owner finance at 8%. the other part of the duplex already has a lady living there. each side rents for 350. we talked to her and she said the seller was a slum lord never fixed nothing and she hopes we buy it, hoping to have a better landlord. the problem is the house needs lots of work, the roof, cracks in wall, paint, water stains, plumbing, electric and others. the house itself looks in okay condition. we did the math and if we can rent the other side were have a positive cash flow of about 300-330 somewhere in that range. so the question is this. is repairing all this stuff worth it for the positive cash flow or would ya just let this one go. thanks
Re: INVESTING IN DUPLEX - Posted by Randy (SD)
Posted by Randy (SD) on December 18, 2003 at 13:20:37:
My first suggestion would be to get firm contractor bids on the repairs necessary, then decide what needs to be done immediately, what you can do yourself and what can be deferred. If your cash flow still looks as attractive then proceed if not pass.
Re: INVESTING IN DUPLEX - Posted by cal(NY)
Posted by cal(NY) on December 18, 2003 at 13:19:59:
Taxes $ 20 per month($240 Year)
Insurance $50 per month($600/year)
Reserves $ 70
Cost of repairs $ 1200 is $6 per month 6% return, $10000 down $50 per month,
Mortgage $39,000 8% 15 yrs $374 per month
Therefore
Income $ 700
less $ 35 (vacancy)
Expenses $ 570
Cash Flow $ 95
You have to take everything into consideration before you can tell if it is a good deal.
Re: INVESTING IN DUPLEX - Posted by Charles
Posted by Charles on December 18, 2003 at 13:19:49:
First find out if the price he’s offering is at, below or above fair market value. It it’s at or above FMV get estimates for a roof, paint inside and out, and flooring, (this should take care of the majority of the needed work) subtract that amount from the purchase price and make your offer based on that figure. The seller might make a counter-offer. If so, you need to determine where you’ll be in regard to cash-flow if you have to pay more. If you’re handy maybe you can do some of the work yourself and save some money.
Best Wishes,
Charles