Which Deal Would You Choose, if Either?
Property A is a 800 sq.ft. condo and Property B is 2,800 sq.ft. townhouse; both are part of a condo association. The properties are in different towns but both are in upstate NY.
Details:
Property A
REO - potential purchase price from bank: $170K, move in condition
Current market price for similar units (non-foreclosure setting): $190K, steady market
Potential rental income: $1,500/month
Expenses:
Property taxes: $4,000/year
Condo Fee: $3,300/year
Insurance: $400/year
Property B
Sheriff sale - potential max bid price: $370K, currently has a tenant paying $3,400/month
Current market price for similar units (non-foreclosure setting): $475K-500K, steady market
Existing (and potential, if tenant stays) rental income: $3,400/month
Expenses:
Property taxes: $13,000/year
Condo Fee: $3,600/year
Insurance: $500/year
Questions:
1. If you had to choose one, which Property would you choose if your strategy is to buy and hold?
2. Which Property would you choose if your strategy is to buy and flip?
3. I have enough cash to do only one of these outright. But if I were to use leverage (drawing down money from a HELOC at 4% (assume enough to fund both Properties with debt and cash)), what is the optimal leverage/cash ratio to use on each property?
Thanks for any insight.