I am closing a duplex this week! some concerns. suggestions?

[Grace Fukuda]

Hello!

My 4th rental property is finally closing this week!

This a duplex, 1600sq, one unit is located 1st level, and the other unit is located 2nd level. The utility work has not been separated yet which I am going to do first thing.

Purchase price: 161,500
Down payment: 40,375 (25% down, 3.5% for 30 year)
Closing cost: about 7,000 (I have more exact number but it went somewhere – I paid 1.5pt for lowering the interest rate by .5%)
Expected rent: 1200 lower unit 800 upper unit(because 1) the meter is not separated and 2) harder access to go to laundry, located in the basement.

I like this property a lot just because this place is located very close to me! – it takes less than 5 minutes of driving from my house.

Now I have concern:

#1

I submitted an offer early in May but there was some delay closing the deal due to appraisal result. Because of that, I had to find another lender to move forward.

This property has some appraisal issue at the first time due to duplex issue. What I was told at that time was “This unit was grandfathered to be converted to a duplex but once the house is burnt down, the property cannot go back to duplex. It can only be a single unit once it is rebuilt.”

The second appraisal also approved its value in condition of “removing the front door (there are two doors at the entrance to show duplex) and kitchen on the second floor.”

Before closing, I was going to call building department of city to confirm it should be built for single unit. I wonder if that would be a red flag for the future maintenance issue.

Do you guys have any experience similar to me? If so, what could be the best way to prepare in case of any issues?

#2

I would like to increase the upper unit’s rent. Currently they are all vacant, so I have some time to work around before listing for rent. All appliances are stainless steel, and this unit has good lighting. One little touch up I was considering was to install a separate electrical so that the tenant does not have any issues.

Also the inspector pointed that the shower of upper unit is not waterproof. I am going to touch up that for the first thing. I wonder what would be other possible rental increase way to maximize the profit. Any suggestions..?