First time multi family duplex buyer

[Michael Carlson]

Hi Biggerpockets community just wanted to check in and see what you guys thought of this deal

490k purchase price duplex in Morris county at 6.5% for 15 years. With my 40% down payment mortgage with property taxes and insurance comes out to $3600 a month.

Current rents are 50% of market value, I'm looking to renovate and bump up to 1800 a unit which is still at least $400 below market value for a 2 bed 1 bath in Morris county.

I strongly believe after replacing the roof, repainting the house, minor landscaping, minor kitchen and bathroom updates I could increase the value of the house to at least 580k. It has modern electrical and copper plumbing. Electrical work was done in the past 10 years, all romex.

I don't feel so confident about this deal since my last deal was 350k purchase price, 100k in renovation and 700k sale price but I need some place to park my money. What are your thoughts?

[Shawn Mcenteer]

Hi @Michael Carlson what's your goal purchasing? Replacing roof, repainting house, minor landlord scaping for a multi family is not going to see a major jump in ARV. I need more information to give a clear diagnosis/ advice. I really need to know what your personal plan is with the property, are you house hacking or buying strictly as investment. This makes a huge difference when it comes to removing tenants. If existing tenants are 50% under market value, you will need to make sure current tenants are out. You cannot just raise rents 50%

Not sure what your cash reserves are or if you are planning to 1031 or something along those lines but I would rather see you keep cash in your pocket and apply it to a rehab that involves addition or updating kitchen/bath so you can see sizable jump in ARV and rent increases.