Input on Investment opportunity

[Pratik Kochar]

Hello Community,

I'm considering an investment opportunity and would like to gather your thoughts and insights. The property in question is a duplex, built in 1985, and consists of two adjacent townhomes that can be sold individually. Both properties fall into Class B- category and has no HOA and no rental restrictions.

Here are the details for each property:

Property 1:

• 3 Bed, 2 Bath (1020 sq ft)
• Purchase Price: $250,000
• Moderate rehab needed (Kitchen, floor, bathroom sink vanity, light & fan fixtures, interior paint)
• Rehab Cost: $30,000
• After Repair Value (ARV): $295,000
• Down Payment: 20% (Out of Pocket: $50,000 + $30,000 (rehab) = $80,000)
• Projected Rental Income Post-renovation: $2100/month

Property 2:

• 2 Bed, 2.5 Bath (1168 sq ft)
• Purchase Price: $230,000
• Moderate rehab needed (Kitchen, floor, bathroom sink vanity, light & fan fixtures, interior paint)
• Rehab Cost: $30,000
• After Repair Value (ARV): $295,000
• Down Payment: 20% (Out of Pocket: $46,000 + $30,000 (rehab) = $76,000)
• Projected Rental Income Post-renovation: $1900/month

The location is moderate, with amenities like shops, restaurants, a mall, and a baseball stadium within a 5-mile radius.

Considering buying both as they are in the same building, the total cost and income overview would be:

• Total Price for Both Properties: $478,000
• Down Payment & Closing: $96,000 + $10,000 = $106,000
• Total Renovations: $60,000
• Total Price (Including Renovations): $478,000 + $60,000 = $538,000
• Total Out of Pocket: $166,000
• Projected Gross Rent Monthly: $4000
• The rate of interest for the mortgage is 7.5%.

I am currently evaluating: A) The break-even point for two townhomes considering a cash investment of close to 32%. B) The pros and cons of having two properties instead of one (especially in terms of liquidity). C) The worth of investing $30k in sweat equity, considering this is an out-of-state investment.

I would appreciate any insights or advice you could give me on this potential investment.

Thank you in advance for your input.