Would you buy this duplex?

[Brian Sorensen]

I have the option to buy a 1942 duplex in fair condition for $95k. It needs a $30K rehab. Rents are currently $700 a side but after upgrading should easily be able to get $800 a side. How good of a deal is this compared to what you typically see/buy/find?

Thanks!

[Joel Owens]

Landlord pay water??

95,000 + 30,000 = 125,000 all in tog et rent ready.

Let's be conservative and use 700. 700 X 2 = 1,400 a month X 12 = 16,800 gross income potential.

16,800 X .40 (60% costs) = 6,720 NOI

At a 10 cap this is worth 67,200 sales price. At 6,720/125,000 = a 5 CAP.

At 125,000 for 1,400 in rent you are at about 1.11% in rent to sales price ratio. Anyway you cut this I would like to see the price come down much further for the work involved. I wouldn't count the 800 in rent into your projections because you may not get that number after purchase and rehab. Hope for the best but plan for the worst.