First rental investment... does this look like something I should move forward on?
I am in the inspection phase of a duplex purchase in Boca Raton, Fl. I have been doing a lot of research and I am starting to think I should leave this deal. I would appreciate any feedback that anyone may have. Here are the details:
There are 2 units each with 1 year leases that supposedly expire in Jan 2016. The rents that are being paid are slightly below market but I am ok with that part. The leases have dates erased and filled in and the last page of each is signed but not dated by the renters. I briefly met each renter and the vibe is ok but I am asking my realtor to get payment receipts and a statement from each renter acknowledging deposits applied, agreed upon rent, lease dates, etc.
The roof needs to be replaced which I knew going in. Initial investment is: $347,500. Current rents: $2450 which I would plan to raise to at least $2900 ($1400 and $1500 for second unit which has some upgrades.) From what I can gather the property is worth $380,000??
The inspection revealed the following other issues of concern: all appliances in both units should be replaced (not immediately or urgently). One air-conditioning units needs replaced. Federal Pacific electric panels need replaced. There are several other issues that exist but that I consider minor in nature.
I do plan on asking for the seller to deal with the electrical panels and I am going to ask for a credit for the roof and air... not sure on amounts yet, etc.
This is a cash deal so I have no mortgage or interest payments. I am still wondering if the return is worth it.
Any and all observations/ advice would be greatly appreciated.
Susan