Is this a good deal? (Newbie needs some guidance.)

4 Replies

howdy BPr's,

I'm considering making my first offer on a property and wanted to get some advice and feedback before pulling the trigger.

Here are the stats:

Asking price: 140k - haven't started the negotiation process yet, I wouldnt pay full price

- purchased for significantly less in the recent past and is clearly a flip

- new: water heater, furnace, roof, windows, kitchen, bathrooms, some new drywall, Wood laminate floors other minor improvements. Place looks great and the work was a B+. 

Single-family home built in the 1900s, converted into a duplex.

First floor is 950 ft.² two bedroom one bath - ($950 min rent maybe $1200.) (average is $989 per rentometer and this is a WAY nicer than average.)

Second floor is 500 ft.² one bedroom one bath with separate entrance - ($550min rent maybe $700.) (average rent is $689 per rentometer.)

- I'm trying to be as conservative as possible with my numbers so I don't get Burned later.

Two car garage with new electric garage door open ( bonus for the big unit.)

Driveway with spots for additional vehicles (2) 

Unfinished basement which I will add coin op laundry to. Possibly be converted for storage or a small rec room ( not sure if it's really worth it.)

Both Have a separate electrical and gas meters but would share one water heater. Also both of separate thermostats, but only the downstairs has air-conditioning. May have to buy a window unit or two for the upstairs

Piti - $975 

Trash - $15

Water for both units - not sure... $35? 

Area is a C+ or maybe just a C. 

Needs: dishwasher ($500 I can do the install.) coin op laundry machines. Maybe one or two window ac units.

I had my uncle, who is an architect by trade, take a look at the place. He seems to think everything is sound and thinks that the only things that maybe be done would be a new porch within the next five years and possibly new stairs (outdoor) which lead to the second unit within 5 years. 

My plan is to owner occupy the first level and life hack my mortgage until I can purchase a second property. Putting only 20% down would leave me about 40k in cash to play with, but I don't make very much money on the books so I'm concerned financing might be an issue. I suppose that's for another post though.

Any and all feedback would be appreciated

@Matthew S.  

You need to figure it out. What may be a good deal for one person, another person would think it is not. It depends on your specific goals and what type of ROI you are looking for.

For example, I had a relative brag to me at a family picnic about how good his investments were doing and how happy he has been all these years with his financial advisor. So  I was curious and had to ask him, "so what kind of return have you been getting?" With a huge smile he said"4%!" I about fell over and in my mind i was thinking "That's it?" So yes, as you can see, what one person thinks is a great deal, another person would pass on.

Learn your market and figure out what kind of retune you want, put the numbers on paper and they will tell you if it's a good deal for you.

Hope this helps ya!

Happing Investing!

Originally posted by @Terry Hershberger:

@Matthew S. 

You need to figure it out. What may be a good deal for one person, another person would think it is not. It depends on your specific goals and what type of ROI you are looking for.

For example, I had a relative brag to me at a family picnic about how good his investments were doing and how happy he has been all these years with his financial advisor. So  I was curious and had to ask him, "so what kind of return have you been getting?" With a huge smile he said"4%!" I about fell over and in my mind i was thinking "That's it?" So yes, as you can see, what one person thinks is a great deal, another person would pass on.

Learn your market and figure out what kind of retune you want, put the numbers on paper and they will tell you if it's a good deal for you.

Hope this helps ya!

Happing Investing!

thanks Terry,

My goal is to buy and hold eventually creating a passive income producing portfolio. I agree that 4% ROI isn't considered great in real estate. Can you help me evaluate the numbers on this one?

Hi Matthew,

I'm a newbie in real-estate investing, but I was wondering why you would live in the bigger unit instead of the smaller one?  It seems like you would be able to live practically rent-free in the small unit, but no in the larger one.

-Josh