Duplex

[Patrick Rowe]

Do you determine the value of a duplex by using the income and 50% rule? Also I have an opportunity to purchase two duplex for 48000-49000 one is a three br 1bath and 2Br 1 ba. The three Br brings in $1100 and the 2br briings in 1000 a month. The property tax and insurances run about $150 per month. I have a banker that will finance any renovation cost and purchase 100 percent. He will do a 20 year loan at 5.75 percent.The properties is not in a war zone.But the area probably is a c-d class area. What do  you think about this deal

[Steve Babiak]

Originally posted by @Patrick Rowe:

ok thanks, I checked rent o meter the rents are actually low for the area. I found out one of them is in a flood zone and I don't buy if it requires flood insurance.

In an earlier post you mentioned financing this purchase; most lenders will require flood zone certification before underwriting the loan, and if in the flood zone they will require flood insurance.

As to whether something is a good deal or not, we can only say that the numbers make this worth taking a deeper look. Each local area has different "values" to make something a deal or not, so numbers that a California investor might think are great (because they get worse numbers in their area) might not be so great for that local area. So you will have to understand the factors that make a good deal for your area. For the numbers you posted, it seems that the 2% rule is being met so it really is worth taking that closer look. Actual rents, leases, expenses, market rents, ARV, household incomes, tenant demand, available rental inventory - just some factors that you should look at.