Buying property in Missouri.
I’m in the process of purchasing a duplex in Columbia Missouri (zip code 65202). It needs a decent amount of work, and I’m buying the property as is. Both units are occupied, and there will be positive cash flow. My purchase price is $100,000 and the home inspector gave the duplex a grade between a C- and B+ and it was built in 1972. The property has not been appraised yet, but I believe I got a deal. The seller was asking for $115,000 but I stuck to my offer. Does anyone think I overpaid for the property?
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That seems ok to me. I think your profitability will be dependent on your expenses. If your operating expenses are 50% of your gross rents, which most experts will say to budget for, you may break even or lose money at first. If it were me, I wouldn't buy anything as-is without knowing exactly what repairs are needed and how much they will cost. I'd also get an inventory of appliances, water heater and HVAC ages, and age of the roof. The other big question is can you get more rent after the repairs? Be sure to use a good rental calculator and enter in all estimates.
Does that market have all you are looking for pertaining to rent growth, job growth, and population trends?
I speak from experience on the as-is. I bought a house as is in KCMO last year for $40K under the market. In the 18 months I owned it I've spent $20K on repairs, a new furnace, water heater, french drain, sub pump, wiring and plumbing issues. Its in an awesome neighborhood and the appreciation is great. But I had to kick out the renter after they caused all sorts of problems with water damage in the basement. If I do as-is again, I will put more time into the DD process and make an educated decision. I probably would have passed on the deal if I knew I'd be shelling out $20K. Owning from a distance has made it more worrisome.