First Investment Property - Duplex

[Joseph Kim]

BP Community, 

I am currently under contract on a duplex in Lawton, OK. The purchase price is $205,000, the seller agreed to cover all the closing costs, and I'm putting 0% down since I'm financing the property with a VA loan. With that being said, my initial costs only consists of the inspection, appraisal, and earnest money ($2000 total). Each unit has 2 bed 2 bath and I plan to live in one of the units with a roommate. Furthermore, I plan to receive a rental income from the tenants in the other unit, from my roommate, and myself that should total to anywhere between $2100-$2400 (I plan to pay myself the same amount as my current living situation). Additionally, my expenses range anywhere between $800-$1000. I've crunched out different numbers a million times and my cashflow seems promising yet I'm having some last minute doubts and trouble figuring out whether my investment is "good."

Please give me insight on house hacking a duplex, feedback/constructive criticism on my current contract, or suggestions on anything I may have overlooked as a newbie. Thank you!

[Abe DeHart]

@Joseph Kim - Welcome to Lawton! Lawton is an amazing market with a lot of potential to scale quickly for new investors. I currently have 40 units in Lawton. Are you buying 2513 SW E? That is the only property in that range and has been for sale for more than 6 months. A well priced duplex in Lawton should be under contract within 2-3 days. 

Regardless of address, the price on your duplex is fairly concerning to me. Good C class duplexes in Lawton run $40-$70K. B class are $60-80K, A class (granite countertops, great neighborhood, etc) run $100K-$140K. I have not seen any duplexes sell >$150K. I have analyzed ~ 1,000 deals in Lawton over the last few years, and on paper they almost always pencil out. The challenge is that you have a rough tenant base, high vacancy, and in order to find tenants that are high quality, you often have to settle for lower rents than “market rent”. Lawton really does not appreciate. Population is stagnant and completely dependent on Ft. Sill. Rents are not appreciating, so this is a market where it is crucial to buy right initially. Most of the deals I get on the mls are va foreclosures from people who overpaid and went u see a couple years later. I would rarely look at a deal that wasn’t at least 1.5%. 

I’d be happy to hop on the phone and have a quick conversation. I’d also reccomend you’d talk to Tammy Neuwirth - Owner of Rent Lawton, realtor, PM. And talk with Tommy Ray - Creative Finance Extraordinaire who has 100s or properties across the US and has been in this market 20+ Years.