Evaluation of Property

[David Roe]

Hello, 

I'm a newbie but have been studying and learning as much as I can and I came across a deal I haven't seen yet.   I would like everyone's opinions.  

It's in the city next to a historical part of town, lots of bars, pubs, micro brews, ect…  Average rent in the area is $718 or rentOmeter with $668 med

HOUSE; the property is a brick duplex; Historical income of combined duplex would be safe to assume Average of $1,400 of combined income.  Electric, water & trash is all paid by the long term renter.

Door 1; is Airbnb rental with past rental history of December 2018 - $1,384.93, January 2019 - $1,522.68, and February at +1,200 as of Feb 11,2018.  Has a single entry for two rental rooms with each room renting at 65-80 a night.  nice bathroom, no kitchen.  Has great Airbnb reviews

Door 2; is long-term rental at $750 per month (leased through 11/30/19) 2 bed room, washer dryer, kitchen is less than 10years old but not new, bathroom was updated. New flooring and paint. 

Facts: Owner listed property at an $85,000 was purchased in 2018 for 41,000 and rehabbed(some) mostly flooring paint and heating and air.  

NUMBERS;  $85,000 asking | $2,500 -$3,000 close | $8,500 down @10%  | rates close to 4.75% | That's $11,500 to close / invested | Vacancy @ 5% | Average Rent =$1,400.00 a month = $16,800.00 a year | Monthly cash flow would average $600 to $700 (all depending on Airbnb).

My only issues with the property is that location most houses are $30,000 to $40,000 or one that's been remodeled for $70,000.  There are foreclosures at $5,000 to $10,000 90% of them are 100% gut jobs with windows broken out and water damage.  I would say it's safe to say the gentleman selling the property bought it for $41,000 has $10=15,000 into the rehab, and $5,000 into the Airbnb furnishings and wants to sell it for $85,000.  But... it does cash flow very well.   

Question is; Would you buy it? 

[Oleg Shalumov]

@David Roe why don’t you buy the houses for $30-40K, invest $20-25K?

This way you would already have more equity in the property than example where you are buying it for $85K