Need Advice: Looking at this 2% rule 3 unit prop as my 2nd Deal

[Jordan Alexander]

Class C neighborhood, 3 units on the property, one duplex 1 bed 1 bath apt (both are already rented currently), & one 3 bed 1 bath house. Gross rent is expected at $1600-1700 with a purchase price of $70,000 (1st time I've seen anything of 2% rule). All units are cleaned well and some updates have been made to paint, flooring, bathroom fixtures, and 4 new windows.

Here are the negatives: No central heating or air, built in 1946, the duplex is metered together & costs approximately $150 per month, there are small waves in the flooring in 1 of the bedrooms, no stove or other appliances yet added.

My thoughts: Some of the numbers seem too good to be true but at the same time I can't help but see big rehab numbers if I need to get HVAC and ducts installed (this makes me the most nervous). I'm currently without a huge cash position. 

Please comment and provide anything I should be thinking about to analyze this deal better and/or if this is just too good of a deal and I need to jump all in. Thanks!

[Joe Scaparra]

Hi Jordan, let me take a stab at this one.  Expected rents 1600-1700 but empty now.  Instead of central air and heat, consider window AC units.  Some might act as both heater and AC I am not sure.  You will need to solve the heating of the unit but these units are small so that should be easy.  Sounds like your on pier and beam and if the floors are livable as you have describe, i would not do any thing to the floors.  I would put modest appliances in possibly used from a used appliance store or craigslist.   

Your one bedrooms units only would need one window unit and the 3 bedroom one maybe two.  

However, you need to make sure what the heck you are getting yourself into.  If this is your first property, I fear you might be getting in over your head.  Here is why!  You are taking on a property that is extremely aged and will constantly need your attention.  On top of that and maybe more important is the type of tenants you can expect to get.  Quality tenants that pay on time, follow your rules, and can take care of the property may be  hard to find.  

2% properties sound great, impossible to find here in Austin.  I even wondered how in the hell one could find such a property.  Then I started looking up north like Chicago, Philly, Detroit, Columbus and realized no sheet there are those type of properties.  In Oklahoma, your able to still find those are great but it take a special kind of owner to love those properties.  I  used to think cash flow and numbers are paramount, but as I have aged now 64 I find that I am willing to sacrifice  a little cash flow (not a lot) for the ease and comfort of managing my portfolio.  Good Luck and Cheers.