Which property to buy?

Question

I’m trying to decide between two properties. One is an out of state property that’s listed for $30k and rents for $750 per month. I have the funds to pay cash. The second option is a duplex close to home that my net income would be around $750 per month. I would have to put the $30k down to secure the loan. Both properties are in good shape and have long-term tenants. Would you use the $30k for a SF property with no mortgage, or for a duplex that’s leveraged? Thanks!

Jason D. · Answer

@Key Dawson if your numbers are accurate, the duplex, hands down

Duplex is closer

Net income is equal to gross income of other property

What are you really getting from a $30k property?

$750 gross rent leaves very little room for error.

Peter M. · Answer

My vote is the closer duplex as well. I find it hard to believe that the 30k property is in that good of shape. Being close is a big plus, as well as having 2 renters in case on unit is vacant. Debt is not horrible as long as it is used properly. After all the tenants are paying it off. You are reaping the rewards of their money down the road.

Frank Wong · Answer

I would usually say go for the one in the better neighborhood but in this case, go with the closer one to home.  No brainer here.

Mark Fries · Answer

@Key Dawson

Buy both of them.

Key Dawson · Answer

@Ned Carey Thanks for the feedback, I’m leaning that way, I’m just not a big fan of debt.

Ned Carey · Answer

@Key Dawson it is hard to say without more specific details. based on what you have given us I would go for the leveraged property.  The fact it is a more expensive property and it is local would be important to me. When you buy $30K properties you are generally getting a high risk property. The fact is is out of your area adds to the risk.

Which property to buy?

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