C duplex C area expectations.
This is my first post so I appreciate your patience if I'm posting in the wrong area or something. I'm also grateful for any feedback.
I'm looking at C properties in C area for the good returns, cash on cash and relatively high rent to purchase price ratio. I understand what to do with a total flip in these areas, ie what finishes to do and how to budget that in if I'm starting from scratch. However, I'm now looking at properties that are currently being rented, but have deferred maintenance issues and some other things. After seeing several duplexes, the condition, and the tenants that are renting them I'm not sure what my expectations should be.
Background: The places I am thinking about have long term renters in them with under market value rent rates. They all smoke. One has a dog. One is moving out at the end of this month. The smoker/pet owner (been renting this place for 9 years) seems like he is wanting to stay.
1. Defered maintenance: In reading the books, everyone buys a place brings it up to a nice standard of maintenance and upgrades HVAC Windows etc and everyone is happy. However in this market it seems like there are no upgraded maintained units and thats what the renters expect. I just feel like upgrading these units won't add to the rent. Maybe the appraisal will go up would be the upside and decreased needs of tenants.
2. Smoking, they all have smokers renting them. In starting this process of building a portfolio I just assumed I wouldn't rent to smokers. But is the demographic of people renting a place for $500 predominately smokers. I'm worried I'm going to be stuck with smokers with these units or the cost of "desmoking" them will put these places out of my criteria.
3. In turning these units over, I was thinking I would replace the linoleum, paint, upgrade anything major system that is needing replacement, and then increase the rent to market value. However, these tenants are happily living in dingy outdated units. I think I would still do this in these units on turnover.
3. Pets, one of the tenants has a pet. One tenant is leaving. Naturally as tenants leave I want to update my rules to my liking... ie no pets, no smoking, and increase rent to market value. I think it would be difficult to get a new renter on the empty unit and tell them no smoking, no pets when the renter in the other side is sitting on the porch smoking with his dog.
4. Lastly, other people have commented on this elsewhere, but I was only allowed to see one unit on these properties. I'm assuming you would just make offer contingent on inspection and ask for concessions on things you find in the other unit.
My idea of Class C rentals was low end finishes, like laminate counter tops, linoleum, and durable finishes that aren't necessarily nice but functional to live with. Am I off base here?
Thanks.