Is this duplex a good deal? New investor here.

[Maggie Thompson]

I am a new investor and looking for insights into this investment deal from others. I am also new to duplexes, but trying to house hack etc and then turn it around as a potential investment property on both sides. Good deal, great deal, bad deal? If it's a good/great deal would it be worth negotiating or just get it at the sale price?
Sale price: $379K
2 Units
Each unit is 3 bedrooms, 2.5 baths, 1 car garage
Very minor upgrades needed right now besides repairs (yard, fencing, window coverings, carpet, paint)
Unit A: rent $1400 (10 month lease)
Unit B: rent $1000 (month to month) - Unit B is the one I'd like to send a 30 day to vacate to move in and fix it up and then rent out 2 of the rooms. So potential rent could be $1200-1300.
I would do a conventional at 15% down.

[Sean Rosenbaum]

Hey Maggie, so the numbers you provided can only tell part of the picture of the deal and as such anyone can only give a partial answer (without making some larger assumptions).  With the initial information you've provided here's my train of thought.

Initial Glance: 

- Does it pass the 1% Rule?  At a sales price of $349k, and gross combined rent being $2400 (possibly $2700 after rehab) I would say it does not meet the 1% rule.  But this rule's primary purpose is help weed out instantly poor deals or highlight deals that should have a further analysis done - so this property hasn't necessarily struck out yet.

- Without knowing anything about the location, I'd wonder if the $1,400 rent is at current market rent values as well (obviously if the two units are very similar, the $1,000 has got to be raised if possible).

Questions to answer to help give a better idea of the deal:

1) Once the monthly tenant is out and the rehab is done, what is the ARV of the property?

2) Do rents match current market rent rates?

3) What is the rehab cost? Sure it's minor, but money is money and needs to be accounted for.

4) Does the location of the property desirable for the caliber of tenants I am looking for? - Poor tenants / tenant selection can cause huge headaches and expenses, especially if their ability to pay rent is not solid.

5) One question I think a lot of people fail to ask themselves is "What is the opportunity cost of this?".  Meaning, if I place my money into this deal, will I be unable to pursue another deal that could potential yield a better return on investment?  In most cases, there will always be a "better deal" out there, but then the question comes down to how likely are you to find that better deal?

There's a lot more questions that you can ask/answer to help get a fuller picture but you're getting your feet wet by analyzing the deal and asking questions, so keep digging for answers and good luck!