How Does This Make Sense?

[Joseph Corlett]

Hello:

I'm new here, but the introduction page won't let me post.

There is a ratty duplex down the street for sale, the Realtor says the bank will probably get 67K for it. I think it needs 50K per unit. How does $16,000.00 per year rent (including a 7% vacancy rate) make a sensible return on $167K?

[Rick H.]

Why this property? Does it somehow "call your name" telling you to "buy me"?

You no doubt have some strong skills sets as a contractor. What is it exactly that you feel you contribute to a deal that would make you inclined to buy one property over another? Your ability to repair a heavy fixer? Your ability to fix it quickly? For less cost than others?

Another way of asking this is for you to question what you add to the formula. Are you good at spotting opportunities that others miss? Extracting concession during negotiation? See an entitlement opportunity such as a lot split or zoning improvement?

My point is that I don't understand why you fixate on a crappy property that requires lots of effort unless the upside works uniquely to your benefit. Maybe you'll just have to look the other way when you drive by this property in the future.