My POTENTIAL First Deal - Questions

[Mike Andes]

I found this deal on Craiglist. What do you guys think?

Its a couple hours south drive of where I live but most multifamily properties near me (whatcom county, WA) don't come close to the 2% rule (or even 1% for that matter)....

It is a duplex. Has two 3 bedroom units. Owner says he is getting $1850/month in total rent... no leases in place but supposedly have been long-term tenants

Asking 138K ... Hopefully could get 20-25K off that=)

2033 S 8th St , Tacoma, WA 98405

Only downside I really see is the crime rate is pretty high in the area... Any locals near there that know the area better?

Link to Craigslist ad: http://seattle.craigslist.org/tac/reo/4503191674.html

Link to Trulia: http://www.trulia.com/property/3014962677-2033-S-8th-St-Tacoma-WA-98405#photo-1

Google Street View: https://www.google.com/maps/@47.253688,-122.464867,3a,37.5y,329.12h,90.93t/data=!3m4!1e1!3m2!1ssm4ArYjocV2jeuwnRwGAXQ!2e0!6m1!1e1

[Matt Schelberg]

@Mike Andes the key words you mentioned were "Owner says he is getting $1850/month in total rent... no leases in place."  Since you're unfamiliar with the area, this deal is going to require some major due diligence.  The owner could be lying about the rents, so you will want to check market rents to confirm this is a realistic number.  The fact that he does not have leases in place is an indicator that this property is very poorly managed.  So look for neglected maintenance issues.

Since this deal will likely require a major investment of your time, keep in mind that there is a strong chance it won't close (It's a CL ad, it is your first deal, property is probably terribly mismanaged, you may find some major issues that will kill the deal, etc).  It's a tough scenario to choose as your first deal, so I would not proceed with a purchase unless you partner with an experienced investor or if you have an experienced mentor that walks you through the due diligence.

But even if this doesn't close, it will be a great learning opportunity that will pay dividends down the road.  You could view it as a dry run so that you gain experience doing the research, working the numbers, estimating rehab costs, etc.  Best of luck!

*Edit:  Looks like you decided not to move forward.  Good, conservative decision.  Always remember Warren Buffett's Rule #1:  Never lose money.