Buying better (more expensive) rentals

[Dawn Vines]

We have always purchased inexpensive properties. The most we've paid in our area (Western NC) is around $35,000 - rents for $550. We are in our 50's and starting to look into the future of our rental "career." We are thinking of buying better quality homes and selling some of the lower quality ones that may need more work in the near future. Our rentals range from $400 to $600/month.

We have a particular home in mind 2 bedroom/1.5 bath for $105,000. Zillow shows a value of $150,000. We'd need to put in a new hvac system, paint, and take up some carpet. The home is in great shape. One owner. Brick, fireplace, nice lot. We'd do all the work except for the HVAC ($7,000). Taxes are $400/year. It could rent for $850. Nice neighborhood and good location. Plus we are buying it from someone we know. He's not going to list it if we want it but if we don't take it, he's going to ask $120,00 with an agent.

We'd buy it with our HELOC and refinance in @ 6 months.

I'm hesitant to buy when we could buy 2-3 homes for that price (but nothing available at the moment) but its a much better neighborhood, better resell value for the future, etc. There's not much to buy here because the housing market is so good. 

Should we take the leap? Am I thinking correctly that it is a good idea all around? I have to convince my husband! :)