Duplex - what would you do?

[Aaron Smith]

Received a lead on a Duplex in Latonia (Covington, KY) for a 2 unit (Two 2/1 apts). Seller paid $90k in 2009 and will sell to me for $30k. It's vacant and needs about $4k - 5k in work. ARV is around 60k. Market rents for a 2 br are around 550/mo with tenant paying everything but water/sanitation. Total cash flow after expenses is $9200/yr. Would YOU: A. Keep it and rent out ($9200/yr cash flow) B. Flip it and make $20k-25k If there are any Northern Kentucky folks I'd like to hear from you as well.

[Derek Wilson]

It depends on your plan. As a buy and hold investor I would be all over the deal. With your cash flow I'm guessing you are putting 20% (6k) down. After repairs and closing costs (if you pay them) you have about 13k give or take of your cash in the property. Cash flowing 9200 per year you make your money back in a year and a half. If you take into account that rent will continue to increase over the years while your payments remain the same your cash flow will only increase.

You can also consider refinancing and getting your cash out which would cut into your cash flow some but you cant complain about +8k per year on $0 of your money.