Review/Critique multiple property purchase - Greenville, SC

[Amy Webber]

Thank you in advance for comments and advice. Sorry for the long post but wanted to make sure I had all the information in there for review - Thanks!

Package Purchase Price - $385k

SFR Brick Ranch @ 40k

Duplexes 3 (6 units) @ 345k

Will be using funds from refinancing other properties at 4.15% to provide 240k at closing, owner is financing the rest at 4.15% for 14 months so that we can refinance these at a year. No penalty for early payoff.

Basically, to get the duplexes that are in really good shape, the SFR in rougher shape is part of the package. My thought is to proceed with the duplexes for a long term play. We are undecided on what to do with the SFR this spring. Opinions and questions welcome!

Properties:

A) Brick SFR - 3/1 - 1100 sq ft -  Price 40k, needs 25-35k of work, market value is about 70k fixed up , would rent for $750 - $795. 

Options: 

1) Resell the SFR as is - maybe make a few thousand, break even, or lose a little

2) Fix the subfloor and prep the bathroom and kitchen to be finished for about 2500 and sell it to someone else to finish the kitchen and bathroom to their specs. Should be able to make a few thousand more

3) Rehab it, rent it, keep it till I can refinance it to get most of our money out of it. It would be worth what we have in it.  Could be worse but this is not ideal.

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B) 3 Duplexes - two story, 1990's construction with roofs less than 2 years old, HVACs less than 5 years old,, each side is a 1000 square feet 2 bedroom, 1.5 bath unit - $345,000 (or $115,000 each).  Comps are hard to come by - there is a sale for 60k, & another for 90k in 2014 for identical units on the same street, and a 2016 sale for same type of duplex at 130k on the same street so the price is reasonable especially for the market in 2017 for the area. 

Each duplex has one side rented at an average of $630 and one side is vacant as the current owner was rehabbing these to raise the rent. These units need some paint, some carpet cleaning, and the top boards of their decks replaced.  Each unit will take less than a $1000 to have rent ready.  

Market rents would be between $725 and $795 per my property manager (has another duplex in the same neighborhood that he manages).  The below market rental units would be raised gradually to market or raised when the units turned.

Duplex Numbers (All three together)

All Monthly Payments: $1600 (Repairs for empty units will be on an LOC and payment on that is included here)

Taxes: $500 per month ($6000 per year) - I think I can get these lowered

Insurance: $1200 per year

Monthly Income (($630 + 725) * 3) = $4065 when fully rented - Should be feasible by April 1

$4065 -1600(pmts)-500(tax set aside)-100(ins set aside) = 1865 remaining

$1865 - 325.20 (PM) - 600 (reserves) = $940 remaining

Thanks for reading this far!

Amy