Should this be my 1st deal or keep walking?

Question

I’m just starting out and came across this. Low maintainance duplex listed for $295k (3bed 2bath each unit), principle & interests $1682, taxes $249, home insurance $104, HOA $240. Landlord pays for utilities (water gas and electricity). Each unit rents for $1450 and $1400- both rarely vacant. Is this good or bad? Starting out not sure about anything at this point.

Ask as much and give suggestions as you please. Open to suggestions.

Michael Stutelberg · Answer

How much is Water, Gas, electricity and garbage? You have $575 left (2850-1682-249-104-240) by my math to pay for these and set aside money for maintenance, cap ex, and vacancy. What ever is left will be your cash flow/month. If cap ex, maintenance, and vacancy are each at 5% that would be a total of $427.5. You will probably be negative cash flow or break even (at best) with this property. If you are able to get the tenants to pay for electricity, water and gas and/or get it at a significantly lower price, that will go along way to being a better deal with a positive cash flow.

Brandon Roof · Answer

Also, don't get too married to wording in property descriptions such as "low maintenance" or "rarely vacant".  Same goes with the units rents.  Those figures may be proforma and not actual, while everybody's interpretation of "low maintenance" and "rarely vacant" can differ widely.  Generally the seller's interpretation will be a little more optimistic and you'll later find yourself very disappointed.

Caleb Heimsoth · Answer

@Mo Muigai. I can tell you this is a bad deal if you pay anywhere near that asking price of 295k.  You won’t make any money

Bud Gaffney · Answer

@Mo Muigai Are these numbers at 30 year or 15 year? If it’s a 30 year I would stay away from this 1 and keep looking.

John Thedford · Answer

Pass

Account Closed · Answer

@Mo Muigai

As others said, I would pass. You'd probably have to get your Mortgage (principal and interestl) below $1,000/mo to make it worth considering.

Account Closed · Answer

Hello Bourbon!  I would not buy a property that the HOA is involved in.  They are too risky and take part of your control with doing anything and not matter what you say.  There must be other opportunities.  How long has it been on the market and why?  Is that foreshadowing?

Your message does not say where you live or where this investment is or what it is or what your goals are in relationship to this   investment.       How is anybody going to recommend on this that does not know this?  There's more to do than just to give the numbers as you did?  The physical info matters but it might show your lack of being ready to make a decision.  Work on your education and be prepared to make a good decision without much risk.  If you are not convinced just walk away.

Good luck to you!

John Woodrich · Answer

@Mo Muigai I would recommend connecting with @Jordan Moorhead

Mo Muigai · Answer

@John Woodrich they are actual duplexes not town homes. Turns out there is no HOA and the owner is our senator and they are liquidating all their properties that they no longer desire to be landlords with his wife... good reason? I don’t have a realtor who can help. Planning to attend some RE events to connect with people

John Woodrich · Answer

This is a duplex that has an HOA?  Is it a pair of townhomes with separate PIDs maybe?

Everyone is saying "no" but you haven't provided enough information.  Hopefully you have a realtor you can rely on who can help you with this, someone who specializes in investment properties.

I also wouldn't draw the conclusion that the experienced investor is selling for a reason that makes it a bad investment.  Many investors sell property to move up to bigger properties or because they need funds for their next project.

Should this be my 1st deal or keep walking?

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