Possible Investment Property-Duplex

[Christopher Stafford]

I am looking to buy my first investment property with a VA Loan. I was wondering if you all good analyze this deal with me. The property is selling at $194,000 4 Bedroom, 2 Bathroom Duplex with two car garages on the bottom floor, a nice deck per unit, and dated interiors (built in 1995). The selling agent said it should be valued around $174,000. The two sides rent out for 875 a piece, currently. The agent said that it should rent out at 900 a side. Its located in a hot, convenient area in Minot, ND. It has great rental history and would be ready to go from the maintenance that was put in. One side currently is leased out and the selling agent said that he would be able to get them to sign another lease if I bought the property. The sellers are an older couple who built several duplexes and are now ready to sell. Only downside is the $584 annual flood insurance that I would have to pay as it is in the flood plain. I've put all the numbers in the rental calculator on this website and have found that I would cash flow at 100 dollars each month for just the 1st year. What do you all think? Am I missing some items? I have attached a link below. Any help would be greatly appreciated as I am active military looking to use my money wisely.

https://www.zillow.com/homedetails/901-2nd-Ave-SW-Minot-ND-58701/220699236_zpid/

[Mark Caiazza]

@Christopher Stafford I would be extra careful in the Minot area. Kudos on you for looking to house hack with your VA… that is absolutely the best way to get started! Unfortunately, I don't think there are any hot areas in Minot right now. The area is saturated with 2/1's for rent and not much demand. Rental rates (and BAH) have plummeted over the past 4-5 years.

Don’t take my word for it and don’t take your agents word for it… go to some of the property managers around town and get the actual data. Find out where people are renting and what they are paying. $900 seems high for that property. They overbuilt during the oil boom and now you can find a newer 2/1 with amenities for sub-$800. Go walk some of the apartment complexes and see what your prospective tenants may be looking at before they see your property (you may be surprised what they can get for $900). 

I didn’t want to post this to be all negative, but more importantly, I don’t want you to get PCS orders in a few years and be under water and stuck with an underperforming property. I would do a little more homework on the market and get some confidence in the numbers. Also, seems like a red flag to me if the agent is telling you he can get the current tenant to sign another lease if you buy the property. Good luck, don’t get discouraged, and reach out to me if you have any questions.