Need Help With Offer

[Rebecca Jeffers]

I'm looking at my first duplex in the DFW metro area. Built in late 60's, 2/2, 2400 sq feet in older but established neighborhood. Renter who wants to stay on one side and owner occupied on other. Renter pays $700 plus $50 for water. There is one water meter for entire duplex. Electric is paid by renter.

Asking price is $80,000. Needs some work, has not been kept up. On the surface looks like minor wood replacement/repair outside, and general cleanup and paint inside. The HVAC units inside have been rebuilt and one outside has been rebuilt and the other outside unit is about 5 years old (Trane). I do have concerns that the rebuilt ones will need replacing at any time. I do not have experience with rebuilt units. Of course an inspection might turn up other things but this is what I know and can see.

Duplex went into foreclosure (Zillow reports sold for $64,000) several years ago and current owner is renting to buy. They either have to refinance or sell. They want out.

They say the property has been appraised at $105,000 in current condition but I do not think it would sell for this. Although the area is nice and close to many things the street is somewhat "shabby" in that it is for the most part, all duplexes renter occupied, and minimally kept. Area seems to stay rented and goes for $700 -800.

Taxes appear to be about $2300 according to Zillow. They do not know what taxes or insurance are as they are paid with their payment. I estimate insurance at around $1200.

I'm tempted to lowball at $68,000. I don't think they will accept it but might be a good starting point.

I have applied the 50% rule and the cash flow is good.

Any advice or wisdom would be appreciated.

[Rolanda Eldridge]

@Rebecca Jeffers Make sure you have accurate figures for taxes/insurance and repairs before offer. It could make a big difference. The 68K offer could start negotiation. You then can make an informed decision...