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Duplex Question?

gfpd311 profile photo
  • Wednesday, January 26, 2005 @ 08:19 PM EST
  • 5 Comments

I am looking to buy a duplex. It has two 1 BR 1 Bath units. One has electric baseboard heat and the other has a oil heated stove for heat. The building is built of block with a flat roof. Looks like an old 60's store building.

Would you replace with heat pumps?

How about flooring? the carpet smells really bad in one, the other has vinyl tiles on concreate floor.

The rent was $225.00 a month for the past renters. I'll ask $300.00 if I replace the heat and air.

No renters in either apartment for noww

They are asking $54,900.00.

Needs $5,000.00 rehab minus heat pump.

Just asking opinions.

Thanks in advance.

Marty

Comments(5)

  • no photo
    mattfish117th December, 2004

    Really not enough information to make a sane decision, but it seems like you are over paying for the property. Did you do an analysis on how much cash flow (or negative cash flow) you are going to end up with if you purchase it and rehab it? I think you'll find that there isn't any positive cash flow... But that just might be my analysis, which was just a quick one.

    Any more information on it? Put down your analysis in numbers here and we can analyze it more effectively...

    Good Luck!
    [addsig]

  • no photo
    Dumdido7th December, 2004

    $54,000 sounds like too much for a building that will only rent for $600 month. Especially when it needs rehabe before it will rent for tht much.

    Aim to spend no more then $45,000 on this property after considering the cost of repairs.

  • ray_higdon
    ray_higdon8th December, 2004

    I agree with Dumdido to a degree. Speculating that you can get the rents to $300 each is one thing, need to know the length of the leases, if they are early in on year leases at 225 each, I wouldn't even pay $45k for it.

  • no photo
    gfpd31126th January, 2005

    Thanks for the replies. It is still for sale. I still am not sure if I want it.

    Thanks,

    Marty

  • no photo
    motivated_buyer26th January, 2005

    Do a "Sellers Concesion" in the Offer To Purchase contract for the cost of rehab. Include the cost of heaters as a negotioating point.

    If they decline revise the offer with the heat costs and keeping the concession for remainder of repairs.

    If they say "No" find a better deal.

    Your ROI is dooable but you need to save every dime you can on this one.

    And it seems based on your purchase priice-to-rROI- you need as much rent as you can keep grin

    What is the FMV (value after rehab)?

    Good Investing.

    Joel

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