Real Estate Broker · Cypress, TX · Member since 2013 · 822 posts · 468 votes
12y
How are you purchasing this? All cash? Financing? If so, terms.
How old are the buildings? Is there any major upcoming capex (roof, siding, furnace, etc.)?
You're going to need to budget for repairs, capex, as well as vacancy, especially since you'll have to reposition #1 to get it to market rents, and lease up #2.
Rental Property Investor · Brookline, MA · Member since 2013 · 1k+ posts · 777 votes
12y
These don't get close to the 1% rule.
If you want to take a look, it might be good practice for estimating the major issues. I'd wager both of these are decent, but not great deals directly at the 1% rule criteria.
I'd throw a 189k offer in on Duplex 2 just to test the desperation.
Salem, OR · Member since 2013 · 701 posts · 159 votes
12y
After adding a vacancy factor and 10% for maintenance/capital I get about a 2.5% CAP. If you pay cash at this price you will make 2.5% + any appreciation. The question becomes, what return do you require?
If you get a 30 year loan at 5% you have a mortgage constant of 6.44%. That is the cap rate that you require. It doesn't look to me these properties will make good investments for a buy and hold investor.
Real Estate Professional · San Francisco-East bay, CA · Member since 2013 · 340 posts · 50 votes
12y
Hi,
@BeBe Cheng: Are you sure you want to do a buy and hold in NorCal? I know there (*might*) be scope for appreciation, but still it looks since late last year, the prices have peaked up.
If you exactly know what you are doing --- please ignore my note here.
Since 2010, I have done about 14 flips in norCal, eastbay area and it worked well then. Since last year I have moved out of the region for investments. Thats my take.
Between- for everybody else who have contributed to this note, I would like to tell, none of what I know or learnt of basics of RE investments, works today in NorCal market. So it is not a surprise that when one tries to put the 1% rule or 50% rule on a NorCal property, it just does not sum up. I am re-learning the area. Ofcourse there is tons of statistical historic information. But the way the region is shaping up will be something new and to watch. Therefore my take on the region is "new approaches".
However what else is working for me in the region is court auction properties.
Investor · San Jose, CA · Member since 2014 · 65 posts · 52 votes
12y
It is around Livermore area. I can not find good properties to buy and hold in the Bay Area anymore. That is why I am moving toward the out skirt of the Bay Area. It is very tough to make the numbers work. Thanks for the input.
Investor · San Jose, CA · Member since 2014 · 65 posts · 52 votes
12y
just update you.
I submitted my offer for 2 units at $510k. Seller stopped take any more offers after 10 offers came in. There were two offers over asking prices buying both units together. I do not think I have a chance.