Property Analysis Duplex

4 Replies

Hey guys!

I would like some help to analyze this Duplex please.

Asking Price: $100k

Income/Monthly: It does not say the gross annual income on the MLS, but finding some similar properties in Zillow (990 ft^2) I think that each unit could rent around $900 (being conservative) with a monthly rent income of $1800. I would need to pay $32 monthly if I were to house hack and having the other unit rented, plus saving half the rent for operation expenses (not taking into account the money for the flip)

Financing: I would do a house hack, therefore FHA loan, 3.50% down payment, 4.38% annual interest.

Some of the closest schools (0.72 mi) that it has, have a low rating on GreatSchools.org, but it has some nice schools within a 4.0 mi ratio (8 point rating). Criminality appears to be low, or non existent (according to crimereports.com). My greatest concern is that the property appears to need some construction work, plus I don't see any appliances in the MLS images, and in the Heating part of the MLS it says: "No air, other." I am praying that this message does not mean that it does not has a heater. So far I think is a good deal, but due to the conditions of the property I don't think the lending company would give me a loan for this buy hold/flip type of units.

What do you think?

@Juan Rosado

You should look into the FHA 203K loan if you have not done so already. They will cover the costs of the rehab and roll it into the loan. Of course you will need to find a lender that offers this product, but it will cover such items as no HVAC and appliances.

Without knowing the exact operating expenses, it seems like a decent deal on the surface. Of course you'd need to budget for insurance, utilities, property taxes, maintenance, repairs, etc.

But definitely look into the 203k loan and speak with a lender about exactly what it'd cover.

@Juan Rosado - I saw this Duplex on MLS. I would expect rents would be ~$750-$850/month. Check this property on Trulia which show crime stats on the Map.

Schools 4 miles away do not matter much as this Duplex will feed to assigned schools.

From the photos, looks like the Seller did some rehab and is now selling AS-IS.

I would recommend to contact the listing agent or your realtor and get income statement (rent roll + expenses) for last 1-2yrs and Seller Disclosure to know the rents and current known issues. Also, check if the Seller is open to FHA loan. Generally Sellers prefer all cash on such deals to avoid lender appraisal & repairs issues.

@Juan Rosado   This one went under contract pretty quickly.  You're right in that it needs some rehab.  You might want to consider rehab loan to fund the rehab and the purchase.  Probably makes sense on that one to do it.  Price looks good.   Crime is everywhere, so don't trust the online sites to tell you that.  That area is a little tough...if you drive it day or night you'll see plenty of characters hanging out.  Cold may scare some of them away, but not all.  Schools for the most part are probably not the best in the city, but when you look at schools you want to look at the ones assigned to it, unless it is a school district that allows open enrollment....and then again I'd still probably look at the local schools as some people won't drive all over town to take their kids to a better school.   Not sure they're attracting people with kids though...maybe.   They both look vacant, so that's why there are no rent numbers.  It's also a foreclosure so slim chance the listing agent has any actual numbers.

Pretty much every home you will see will have heat.  Not guaranteed, but it will be rare there is no heat.  I'll even bet most of the homes you see will have AC.  I can't see units on this one so not sure, or maybe they are missing.  Occasionally you may see window units, but for most of what you see will have HVAC.

Remember since these are vacant, budget for repair time, leasing time, and leasing fee....I'd think 3-4 months....1month rehab, 1 month to lease, and 1month lease fee.  I think your rent is probably a little optimistic...for this area.

Also if you use rehab loan, then your interest will be about 1% higher I'm thinking.

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