First multi family, Three duplexes. Rent about 500/month each unit (can probably be bumped minimally), taxes 3000/yr, ins 1500/yr, common area and yard care 200/month. All a/c less than 3 years old, roof less than 10 years old. Utilities responsibility of tenant. purchase price 300,000. Repairs minimal estimate 5000. All info will be verified as correct.
So what do you guys think?
What’s the area like? 500 dollar a rent duplexes can be pretty tough in the areas I’m used to seeing those kind of rents
Lower income, acceptable crime rate. Rural older area.
I wouldn’t want to own something like that but if you’re comfortable with it, go for it
I bought a similar property for $250k. Get your rents to $600-$650/month, and get your purchase price down some. I think you’d be ok.
Rural rental can be very difficult to find qualified applicants. They will be of lower quality and even less responsible than urban welfare tenants. Your vacancy rates will also be much higher/longer due to fewer applicants.
This would probably be a purchase I would not be willing to take a risk on but it is entirely dependant on your due diligence in regards to the potential tenant base for the area.
May i ask what state this is in??
@Charles Lecroy , if you're financing that, do you think it will generate positive cash-flow? It looks really tight with those numbers.
Also, you mention that its a rural area. Durability of income is also important. When you have turnover, will it take extra time to find a new tenant because there aren't as many prospective tenants looking there.
To me, this isn't the kind of deal I would be looking for. Perhaps if you can negotiate the price down more or if there is a way to improve the units and get somewhat more rent, then it might be more workable.
Thank you for your responses!!! I am new to Bigger Pockets.
Property is in Georgia.
If its bring in $500 a month the area may not be the best so make sure you’re comfortable dealing with low income tenant (not that they’re all bad). Also idk about your area but usually the places renting for $500 are bought at or less than 150k.
How much can you increase the rent roll by? Will the property even cash flow? Does it need extensive work?
Estimated cash flow 480/month. Minimal repairs, I estimated 2k. Rent could be increased minimally at this time. I estimate return of about 9%
$300,000 for 3 duplexes (6 units total @ 500/mo) = $3000/mo gross rental income
Seems like an OK deal to me. Meets the 1% rule. But I agree with the others that anywhere that rents only $500/mo could be pretty rough clientele and certainly should be taken into account with your vacancy rate.
If you did some minor repair work maybe you can bump the rents up a bit? Try plugging the address into Rentometer.com and see what the average rents are in the area. Maybe you can do a few cosmetic repairs to get closer to the median range. Also check craigslist and see what other properties are renting for around you.
Have you plugged everything into the bigger pockets rental property calculator? Plug in some numbers and see what purchase price it would take to get you $100-$200 cash flow per door.
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