Need help on analyzing this deal on Duplex

[Javonne Gray]

Hello,

My husband and I are looking to purchase our first investment property. We have been talking to a seller who would like to sell his duplex for 86k (He told me 80k in our first conversation, went up to 86k the next day and when asked why he said because of the repairs/work that he has put into and will need to put into the property before selling it). 

When I looked at duplexes sold within past 6 months in that area of the city, 2 sold for ~35k but from the looks of the pics needed extensive repair, 1 sold for 71.2k in similar condition to his. 

The seller's property would need the driveway resurfaced, no other repairs needed at this time. Both units are occupied bringing in a combined total of $1580/month

My question is: should I assume that the property around the corner went for cheaper because it was vacant and pay a bit more? if so, how much more should I be looking to pay for this property?

[Blaine Alger]

@Javonne Gray

Congrats on taking action and pursuing yalls first rental. 

Only advice I would give you is to keep in mind that properties less than 4 units are appraised based off of comparable sales and not necessarily the income they produce. With this in mind, I would be wanting to get this property for a price that is closer to that comp of 71.2k. 

But at the end of the day, with the price he gave you, the numbers still make sense and it still looks like a good deal. Only issue you might have is getting financing, if the property ends up appraising for less than what you agreed to pay, because the bank might require more of a down payment to meet their LTV requirements.

However, if cashflow is what yall are looking for, I would say pull the trigger and figure out the rest as you go!

Best of Luck!

-BA