Is this a worthwhile first deal?

Question

So I've recently found a duplex in Redding that I think could make sense for me to buy as my first deal if I arrange the numbers right. And like the book on rental property investing suggested I want to know if you guys think its solid or not.

It is a duplex with both units being 2 bed 1 bath and the agent said it needs some tlc. The seller is asking 195000 and the monthly rent total is 1625

Here is a link to the listing if you want to see more:

https://www.coldwellbanker.com/property/1078-Bond-...

I may have some investors to talk to about funding it if its good enough.

Thanks, Nigel

Seth Ferguson · Answer

Hi @Nigel Ford,

What you'll find is that just getting through your first deal makes it a good one. Many of the investors I interview say their first deal is never their best, but it gets the ball rolling. If the numbers work, go for it and don't look back. There are many more deals down the road.

David Steinbok · Answer

If total rent is greater than mortgage payment + insurance + property tax + 200$ buffer and you still have cash flow,  then it's a good deal for your first one. Too many people get caught up in analysis paralysis and never take action. Keep it simple.

Karen Margrave · Answer

@Nigel Ford  it's hard to tell if it's a good deal or bad deal, not knowing what the interiors look like. As to location, it's not the best but not the worst either.  We actually built the medical clinic right by that on Churn Creek Rd., and also a small 4 building office complex just across from the high school several years ago.

If you're already working with an agent, I have to be careful not to step on any toes, if not, let me know and we can check them out further for you. Message me with any questions.

Joshua Cruz · Answer

i agree with @Robert Ryness . checkout rentometer.com to see what rent might really look like and if thats low/high. what do repairs look like?

Robert Ryness · Answer

Hi @Nigel Ford

It is difficult to tell if it is a sound investment without some more information. What is the scope of work needed on the repairs? What is the market value for the rent?... Etc. With that being said, @Seth Ferguson makes a very good point about just getting started.

Have you ran the numbers on the calculators here on bp? That's the first place i would start, then you can evaluate if the numbers are too your liking and lineup with your investing goals. You can also get an estimate of the market rent using rentometer.

Hope that helps a little, feel free to reach out.

Robert

Nigel Ford · Answer

I've found out that both roofs are in need of replacement soon, and I'm not allowed to see the interior until after I get an offer excepted and have an inspection done. What range of an offer would you do?

Nigel Ford · Answer

Your right Theo I was being a bit optimistic on the numbers on that duplex . Now I'm interested in the properties that Dylan brought up specifically 2962 Lanning, I CALL DIBS! haha joking...

I am excited to see Redding this weekend and what its like up there, I haven't been that far north before. The only thing that concerns me is the low population growth and crime stats. Do you think that could be a problem in the future?

Again thank you for all your helpful advice, Nigel

Theo Hicks · Answer

Saying "if I arrange the numbers right" is kind of concerning... If you need to "arrange" the numbers in order for the deal to make sense, or if you find yourself wanting to arrange the numbers so the deal makes sense, then it probably isn't a good deal.

Nigel Ford · Answer

Dylan,  I actualy looked at the house on lanning as well and the agent sais it has a 1 bed each duplex in the back that is in very bad shape but still inhabited. Either way I want to drive up there and take a closer look with the agent if I can next weekend. I am a bit more drawn to a 2 bed unit because I heard they are more in demand through a recession, compared to the higher end and lower end units. Is that something I should take in account or should I just take what I can get that works now?  Thank you for all the helpful input, Nigel

Dylan Vargas · Answer

@Nigel Ford  Welcome! 1066 Pine and 2962 Lanning give you the %1 rule and even more than 1% on Pine units. I do like the fact that each unit has a garage and laundry hookups on the Bond St property you are asking about. Are you planning on living in one of the units or non owner occupy? I dont know the areas that well so cant help with that. @Karen Margrave may be able to assist. I would check the big ticket items for future repair ie; roof, windows, well and septic if applies, water heaters flooring etc. Good luck and keep us posted.

Is this a worthwhile first deal?

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