Hi all, I'm very very new. I've been reading some books lately and I'm trying to soak up as much as I can. I've been listening to the BP podcast nearly nonstop now for a few days. In no way do I think I'm ready to dive in to RE.
However, there's an interesting property situation that my mom's living in, and I used it as an opportunity to pretend-crunch some numbers. However, I feel like I can't be doing it right. And I'd like some feedback from someone to see where my thoughts have started going wrong.
My mom lives in a duplex. The whole unit (both doors) are owned by some family of ours. The side my mom lives in is in fine liveable condition. A bit dated and could use some repairs, but it's doing fine for her. The other side is in rough shape. It looks like they started some demolition, and maybe found some stuff that ended up suggesting much higher repair costs than they were ready for. Either way - that side currently sits un-rented. I've heard them (the family owners) say that if it was fixed up they could easily rent each side for 1400 a month. I don't know if they're still paying on the property or if they own it outright.
I looked the property up on Zillow, because I didn't even know where to start with number crunching. Zillow lists that whole property - both doors - together at 380k.
I don't think it would sell for that considering the condition. So I just put 300k in the BP calculator, and then guesstimated different repair costs between 30-50k. Adding in guesses for annual tax/insurance at 5k a piece and a 4% interest rate, the total monthly payment comes to around $2,450.
If I wanted to approach my family about purchasing the place, are any of my guesses even in the right range? Is offering 300k on a Zillow-estimated 380k property too long of a shot? Is it too much considering the condition? Assuming the place could be rented for $2800 per month, is the resulting $350 profit (based on all my guesses) enough to cover the things like putting money away for repairs and whatnot? And still come out ahead?
Is a property with that much needed repair work maybe too large to tackle for a beginner in my position?