Option 1 or option 2?
Quick scenario analysis:
Given these two options, which would you go for first assuming you have the ability to act on one right away.
Option 1: Fully rented duplex listed for $75k in a good school district. Total monthly rent is $1300 and the cash flow would be about $300/month total. The units are in decent rentable condition but could use some updating.
Cash out of pocket is $15k down and the property will probably need about $2000-$3000 in repairs.
Option 2: A foreclosed SFR in a great school district listed for $65k. Two bedroom one bath. The house needs a good amount of work probably $8,000. When rented we could probably get $1100/month with a cash flow of about $460/month. A comparable home sold in the same area for $45k not long ago.
Cash out of pocket would be around $18k.
My debate is with the same out of pocket expense do I go for the guaranteed cash flow in the duplex or roll the dice, fix up the forclosure to get a higher cash flow and have a better chance at an increased home value? Both investments I'd plan to buy and hold.
Thanks,
Dan