How Much Would You Pay for This Duplex?

5 Replies

I'm looking at a duplex in a college town. The unit was built in 1962 and has two 1BR/1BA units about 600 sq feet each that show their age. If I took the duplex up to the prevailing new/fancy standard for rehabs in town (black appliances, new cabinets, fresh pergo floors, etc) I think they could each rent for $720-$800/month. Location is very good with direct bus to campus, two popular coffee shops nearby. Very safe neighborhood.

To hit that standard, it probably needs:

1. new roof (1300 sq ft?)

2. new windows (12 of them)

3. new floors in one of two units (600 sq feet)

4. updated kitchen

I'm guessing I might be able to do this and get the units up to snuff for $55,000.

I think the property has modest appreciation potential but strong rental growth potential. Neighborhood is mix of rental and single family, with SF homes showing strong appreciation.

Given all this, if you wanted $100/door, what would you pay for this duplex?

Originally posted by @Logan Hassinger :

@Patrick M.

I would try to be all in for around 100k. 

 So that 100k would include the 55k for the improvements? Or buy for 100k plus be willing to do 55k in improvements?  Just in case it wasn't clear above, rent if all spruced up would be 1500-1600/month.  Thanks!

@Patrick M.

Good question, so I wouldn't pay more than 55k for the property then your renovations should put you under 110k all in. 

My assumptions are that you are self managing, annual taxes are in around 2.25% of property value, annual insurance in the neighborhood of 800-1200, annual maintanence/capital reserves of 4800, and annual vacancy of one units rent. 

Not sure what you financing picture is like but I would at least be trying to capture a 15% COC . I think you can read in to how much cash outlay that leaves you to achieve this.

My all-in wouldn't be more than about 95X monthly rents.   I have found new windows to be a poor investment in my buy and hold apts.  Unless they are broken or leaking, your payback on that will take many many years.  Good luck @Patrick M. !

@Patrick M. I would pay $0 for it. Pass on this deal. I've found that 1 bed units become a nightmare. They have high vacancy and low rents. And the fact that this duplex has two of them???? It might be a college town, but a lot of college students want roommates (typically to bring the rent down for them). I would stay away from this property. If you are going to buy it, discount it 10% at least to make up for your vacancies that you are going to incur

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