Foreclosure Rehab or Duplex?

[Chris Willis]

I'm new to the REI market but actively seeking my first investment. I am debating on whether or not I should pursue a foreclosed home and renovate or buy a duplex.

-I have found a foreclosure in my general area for roughly $49k, which does need some labor on the inside (unclear without an inspector). I could do some of the interior carpentry, painting, etc. And I have a great network of contractors I currently insure at the agency I work for. 

-I have also found a duplex listed for $108k just outside of a busy (downtown) street in Chestertown, Maryland. May need some TLC but currently housing two tenants. Rent in the area averages just under $1k/month conservatively.

I would appreciate any advice, suggestions, & criticism.

Thanks

[Ray Slack]

Well give us a bit more information. 

Do you plan to "Flip" these or keep them as rentals?  

What are the estimated rehab costs on the $49k property and would would it be worth when you are finished?  what would it rent for?  What is the rental market like? 

On the duplex are you getting 2 units?  or just buying 1/2 of a 2 unit property? you say market rent is $1,000 is that per unit?  meaning $2k a month for both units? 

Both the areas Centerville and Chestertown seem like fairly Rural areas or small towns..  These small towns generally have very low turn over rates and property is hard to sell.. They also tend to have slow appreciation.. The plus side to that is the rental returns are usually very high..  You should be getting a net cap rate or "Cash on Cash " return of at least 15% in a rural area after all expenses from a rental.

A few more questions:

1. Do you plan on paying cash for the properties or getting a mortgage? 

2. Do you own the home you live in or do you rent?

The best advise I can give is do a LOT of research before jumping into buying something and don't trust what your realtor tells you something will rent or sell for after you have rehabbed it.. They tend to make your profit seem much rosier to get you to buy the property in the 1st place.

 Sorry the more information you can give us the more we can help..  BTW although my area says Miami Beach I go back and forth between Maryland and Miami Beach and 1/2 of my investment properties are in MD.