Hey everyone I just put a bid on a Homepath Duplex Property in a South Jersey town that is just outside of Philadelphia and has a young artsy vibe to it albeit a very small pocket of a town with approximately 1300. This property is an attached duplex that is an actual twin. Next door the fellow gets $1300 monthly so that is my projected rent. Although it make s no difference the single families in this block go for $250-$300k and its near shopping, food, and a block away from a park.The property needs mostly paint and carpet with a renovation of the kitchen and the back patio on just one of the units. Also the back of the hous e has some cracks towards the foundation but when I go to the basement I did not see any water damage.I'm not for certain but I was quoted at it being arounf 10-15k worth of renovation so I would do a FHA 203k streamline. If this were a SWOT analysis the weaknesses of this project is that the duplex is very small being that it is a twin and its square fooage is at 1,440 and the area that I would occupy temporarily has a few steps from end to end. Also the other weakness would be the infamous New Jersey annual expenses at $6,295 and the fact I am clueless when it comes to construction and its total cost so lets just say I'm all in at $144,000. I would gross $31,200 upon moving out but for a year I would be at $15,600. I would be at 3.75% interest with an additional MIP. I actually had another same style duplex and situation that did not appraise well for several reason and one was the fact that the contractor put in less in renovation cost than it actually needed and there were no real comps for this rare situation of twin duplexes in the area so it was compared to single families so long story short I pulled out of that deal. This duplex is in much better condition but I am weary of when I try to take a HELOC or any other type of loan I may not get as much . Here are my questions.
1. Would this be a solid buy?
2. I know there no real way to tell but what ball park should I be expecting for renovation?
Hello @Randall Kates ,
Is the house next door a duplex? Using comps of single families and non-like style homes is a recipe for disaster for your analysis. You need to be confident on what your NOI and ARV will realistically be.
If you need more help looking at this deal I am more than happy to help. I am licensed in NJ and I am very familiar with South Jersey.
@RyanFagan yes indeed the house next door is a duplex. I'll be reaching out I appreciate you taking the time out to lend your opinion.
@Randall Kates , all numbers aside, one question that comes to my mind is what is the rental market like in this small town with a population of 1300?
Is it an attractive place to live? Is there currently a surplus or a shortage of properties for rent? Is the town within commuting distance of a large city that provides a constant job flow? Are other investors doing business in this town already? These are the macro aspects that I would personally first look into.
@RobBrautigam Great Questions.
1. This place is called Collingswood NJ it usually rents 2 bedrooms from $1000-$1300.
2. When it comes to South Jersey it is the hippest town because of its proximity to Philly which is only 8 minutes away and its variety of food, arts, and programs held on the regular. With that being sai d because of it being so small there is a shortage of properties to rent. Other investors are here and its a decent town to flip in with prices around $150- $200k at a selling point.
Hey Randall Kates, did you end up putting an offer on this deal?? I did a search for Collingswood and came across this post. I own a duplex that's a twin down by the pool in town, great little units, there are a dozen or so just like it in the area.
@Randall Kates, see above