First investment: bundleing two properties

[Tanner K.]

First off I’d like to introduce myself.. My name is Tanner Kier, I’m new to bigger pockets and real estate investing. This is my first deal and it’s a quite complex one so I’d like to get some opinions on it. So here’s the scoop: I’m working with my long time friend as a business partner. We have the same love and drive for real estate and we get along great. We’ve both been study a lot and finally found an amazing deal through creative methods I learned in Brandon Turners book : the book on rental property investing. I started using Craig’s list’s “for rent” ads to find landlords that might want to sell. I got a response from a 62 Yr/old realtor, looking to slowly get out of the landlord game. She has 5 properties and is looking to sell two of them. All are within walking distance of the largest state university in the area. They have been in the area for 20yrs and have NEVER had vacancies due to their low rent. One is a side by side duplex, great condition, 4 beds and two baths on either side, asking $270,000, current income: $2600/m. Needs a new roof within 2 yrs and a furnace within about 2-4 years. No other issues. The other is a single family home used as a licensed rental, 4 beds 2 baths, 2 stall garage. current income: $1200/m. We just toured them today and after some talk on price we offered them $365,000 for both properties. Roughly 93.5 cents on the dollar. Is this a good idea? Is this too risky? We will be doing our own property management but still factor the cost because we will outsource in the future. Please reply with any comments/advice/questions. Any help is appreciated.

ALL COSTS/INCOME ARE ASSUMING $350/ROOM

Duplex: asking $270k, offering 250k

Income:

-current: $2600/m ($300/rm)

-Easily possible: $2800/m ($350/rm)

-expected: $3200/m ($400/rm)

Property tax: $2600 annually

No utilities

Vacancy 8%: $224

Repairs 8%: $224

Capex 8%: $224

Property Management 13%:

Insurance: $100/m

Mortgage:

- 4.5% for 30yrs $1,267/m

Total expenses: $2,619/m

Total income: $2,800/m

Cash flow after expenses: $180/m

SFH: asking $120k, offering $115k

Income:

-current: $1200/m ($300/rm)

-Easily possible: $1400/m ($350/rm)

-expected: $1600/m ($400/rm)

Property tax: $1400 annually

No utilities

Vacancy 8%: $112

Repairs 8%: $112

Capex 8%: $112

Property Management 13%: $182

Insurance: $100/m

Mortgage:

- 4.5% for 30yrs $583/m

Total expenses: $1,317/m

Total income: $1,400/m

Cash flow after expenses: $83/m