Could you give me some feedback about the following deal I have under contract? This is a duplex in the Westland Michigan area. Both units are 3 bedrooms, 1 bathroom, no garage, but partially finished basement. Built 1973. Generally nice area, near lots of schools.
Purchase price: $94000
Rents: $1775 (combined, currently tenanted, rentometer suggests 1000 for other 3 bedroom houses).
Including 10% PM and insurance, it comes out to $1000 cashflow per month. About 13% cap rate. So the financials look solid.
(Yes I know there is maintenance and capex, but I don't just take out an arbitrary amount, since that doesn't help).
My biggest concerns are as follows:
1. Tenant 1 has had trouble paying and is in the process of being evicted. Already had her court date. Tenant 2 is on time, but they also likely to move out. They also have too many people in that property (8).
2. We had an inspection done and there is some black mold in the attic above where they are venting out of the bathroom straight into the attic. No other major problems. Roof probably has another 5yrs left, furnaces are new.
So two questions: Would you buy it knowing the tenant problems AND
would the black mold problem be relatively straightfoward to deal with? Do you have recommendations of someone I could talk to the SE Michigan area?
@James De Silva without running numbers and just addressing your questions.... If the mold is contained it should be relatively easy to fix and you can always get new tenants in. If the numbers work for you go for it. Maybe just add in the cost to evict and take care of the mold. Call a mold specialist. In an attic it can be cleaned and sprayed to encapsulate. Good luck.