New Construction Duplex in the Ghetto, First Deal, HELP

[Alex McLeod]

Hello everyone,

First timer here to make a post regarding an investment opportunity I have come across. I am curious to gather some expert feedback.

I just had an offer accepted on a Duplex that was essentially gutted and completely renovated from the ground up. All large cap ex items have been replaced (plumbing, electric, roof, A/C, windows, appliances). It was priced well and the cash flow scenarios I have run show a 14-19% CoC return. These scenarios were based on various mortgage rates I have quoted with 25% down, property management fees, taxes, insurance, and market rents. Based on the scenarios am showing a monthly net cash flow of about $700-$1044/month, less maintenance and repairs.

To me, this seems as though the numbers work exceptionally well. However, this duplex is in one of the rougher parts of Orlando, FL. Lower income, high crime, seedy area. The duplex is by far the nicest in the area as well. I would be hiring a very strong and reputable PM in the area who manages another property a few streets over.

Does anyone have any thoughts on this? I've been looking for a long time to finally make the jump into an investment property such as this one however the tenant pool is by far the biggest risk here. I do not expect any large cap ex spends due to the new condition of the property unless of course it is terribly damaged by bad tenants.

Look forward to hearing from the community.

Alex