Deal help in Ogden Utah

4 Replies

Hey all,

I have a duplex under contract in Ogden Utah.  It is a 2/1 with 700 sq/ft per side. Asking price was $154900 and offered $144900 and was accepted.  Roof needs to be redone. One side had a tenant who smokes in the unit. I am thinking about removing both tenants asap and trying to get the smoke smell out but removing all carpet, whipping down down every surface, getting ducts cleaned and running an o-zone machine if needed. There is about $16,000 worth of work that I can calculate from paint and new flooring.  I am pretty sure the seller will not budge on price anymore.  I need help determining if this is still a good deal.

Numbers:

Sale price: $144,900

Rehab: $16,000 including new roof (roof is about $8,000 and has 2-3 years left so doesn't have to be done immediately)

Down payment (25%): $39,500

Debt service: $711 PITI, HELCO payment $326 (interest only would be $118 but want to pay back principle ASAP) . Total: $1,037'

Current rents per side: $600. should be able to get up to $700 with rehab.

Cash after debt services:  rent $600 per side- $163

                                         rent $700 per side-$363

In this area, its difficult to find deals in the 1% rent to purchase price ratio.  

Let me know what everyone thinks. Am i missing anything? I will keep all cash after debt services till i build up a nice cushion, then start putting even more towards HELOC principle since it is a variable rate. Thanks!

How familiar are you with the CAP rates in the area? what would you expect the value of the property to be after renovation? if your sure there aren't any other repair costs then you should be good at the 700 per side. 600 might be a bit tight. I'm don't have a ton of experience but these are my thoughts. just make sure you keep that positive cash flow.

Finding deals in Utah is difficult.  Did you include vacancy, property management, repairs & maintenance in your analysis?  

The BP calculator for rental property might help you in determining if this is a good deal. 

@Craig J Chelette Look good to me. One thing I have found in the Utah Market is the cap rate is better in worse neighborhoods. I owned a condo downtown SLC that was a 1% deal that made great money. I finally sold it because it was a pain to manage due to the tenant and neighbor types. 

With heavy smoke damage, I recommend budgeting to paint the units as well, using a shellac based primer underneath to seal in as much of the smoke as possible.  Utilizing a Hydroxyl generator in addition to ozone will also help more than ozone alone.

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