Looking to get some advice from everyone.
I am currently looking at this duplex built in 2014.
1,765 per unit
Each unit is 3 bed 2.5 bath. Mirror image of each other.
Sellers asking price: $330,000
Annual propert tax: $2,616
Rehab needed: $5,000 (just paint)
Average area rent: $1,000-1,400
Thinking to set my rent at $1,100-1,200 monthly
Has been on the market for 364 days. Did a walk through with his realtor today. Property is is excellent condition. Brand new exterior paint. Has separate power meters, separate water meters, and separate gas meters.
I am thinking on offering at $280,000 and would just like to get some feedback. Numbers in the picture is quoted off the sellers asking price with 20% down and 4% interest rate.
Run it through an analysis and if it hits your numbers, let it rip!
Any specific questions you’re trying to get advice for?
I ran it through the calculators.
At a purchase price of 280k it will cash flow $365 a month. I was just wondering if anyone else would purchase or what would be around the offer they submit. Also the 2020 taxes were at 2100 annual. I’m assuming I need to base my taxes off the 280K purchase price at the current tax rate of 2.6938?
@Sam Collins it’s been on for a year? Get it for as low as you can where the numbers still hit your criteria.
Yes, assume taxes will increase to be based off of the new purchase price.
Yes it's in a very rural area. Also the MLS has it listed as a single family home. I'm assuming that's probably 2 main reasons why it's been on so long.
Sorry Sam, but IMO those numbers look terrible, especially if you are looking for great Cashflow. I can get the kind of rent you are looking at for something half the price, already rehabbed with tenants in place with PM in place here in KC where I do business. If you ever consider a different market let me know. I wish you the best of luck!
@Sam Collins I recently did this and used an FHA loan to purchase a duplex. I made sure that the numbers were meeting a 1% rule or better when all units were rented out for my ROI. I also had to put in a good bit of rehab and my two suggestions are 1. High ball your rent a little bit, because there is a bit of a renting shortage right now. 2. Whatever your rehab budget is multiply it by at least 1.5 because even when you double check your numbers, unexpected things happen that can cost an extra 500 or 1,000 here and there and it adds up.
@Sam Collins it's hard to imagine that any property needing only $5000 in renovations would be on the market for 364 days in today's market. Have you asked for disclosures? I think you need to do some significant due diligence.
Nothing on the disclosures. It was not a rental property to start with. He built it for his mother and sister to live in. Mother passed away and sister moved out. Was only lived in for 3 years. All I can tell is it is needing paint and patches on the nail holes. I have walked property 2 times and spent over 2 hours looking for things today. Sellers agent disclosed that he hasn't even received an offer on the property since listed. From the looks the property is in excellent condition. No stains on the carpet or damage to anything. Considering duration on the market I am considering dropping my offer down to 230-240k lowest rent in the area is around 1100 highest is around 1650. But that is for SFH. Not sure how much that changes for duplexes. Apartments rent for 1200-1450 in my area and stay constantly leased. Sellers agent also is terrible. My agent called for the last 2 days and finally received a text from her saying we could view property. Listing agent is a close family member of the owner so I'm sure it's low on her list. Water, sewer, power, and gas are all separate metered from A unit to B unit.
@Sam Collins I don't know the Houston market but what I'm seeing on a macro level is that the market is still strong. DOM decreased from 51 days in August 2020 to 26 days in August 2021. Supply of inventory has decreased from 2.6 to 1.9 months in that same period. I would recommend asking your agent for these figures in the immediate area. If those numbers are consistent, then you have to assume there is something else depressing the interest in this particular property. It might be either over priced or there is something associated with the property itself. You mentioned that the mother is deceased. It might be along shot but did she die in the house? TX las doesn't require a natural death in the house to be disclosed so it might be a stretch but I wouldn't leave any stones unturned on a home that has been sitting that long.