First Investment Property - North Texas

[Chris Palmer]

My wife and I just made an offer on our first investment property and we have a few questions regarding our potential investment.

First some background on the property, this property hit the market just a few days ago, the owner has held the property for a long period of time, over 25 years. The property has two units a 2 bed 1 bath main house @ around 1400 sq ft which was built in the 1920s, and a 600 sq ft cottage with 1 bed and 1 bath.

The cottage is currently vacant and needs some work. The main house is rented but has been rented by the same tenants for over 20 years. In that time little to no repairs have been made to the main house. When we looked at the main house there was little doubt that there would need to be significant changes made to make it rentable for new tenants.

The property was listed for just under $100k, and the neighboring properties all come in well over $150k. It is also one the edge of a historical district and has lots of very nice homes in and around the area.

We made an all cash offer for just under the asking price, as we wait to see if our offer is accepted we did have some questions.

1. Rental comps in the area go for $800 and $600 respectively, how much of an improvement investment should we make into these properties to make them rentable?
2. While I’m working on the improvements, how can I protect our investment from theft of appliances or materials?
3. Since there are some obvious repairs needed, once the inspection is complete, what sort of repairs or cost would drive this into something we should walk away from?

Thanks in advance for your help!

Regards,

Chris