First Multi Family Rental Property

[Edward Bowlby]

I am considering buying my first rental property. The property is a duplex in Urbana Illinois. It is listed at $79,900. It is located near shopping, restaurants, school and bus lines, for easy access to the University of Illinois. The main level is 2 bedrooms that could be converted into 3, the lease expires June 2019. Current rent is $650/month for the top unit. The lower level is 1 bedroom, lease expires June 2019. Current rent is $450/month. Tenants pay gas, electric and power. Garage and lower level laundry are shared. Both units have very spacious rooms. New roof in fall 2017. Large 2 car garage and back yard patio. The home was built in 1924 and has been on the market for almost a year. The home was under contract for $75,000 and inspected in 2018 but the buyer pulled out. The inspection came back with high radon levels as well as an area with possible mold. The taxes are high at $115 a month, insurance is $20 a month, property management is $100 a month. After all the expenses, the net profit comes out to about $281 a month if I hire a property manager. Is this a solid first deal or is the monthly net profit not enough?

[Jack Medford]

$281 for duplex is pretty nice for a first deal. That is $140/door. A lot of investors shoot for $100/door minimum, so you've got a bit of cushion there. You may find the numbers aren't that comfy, especially early on, but at the very least it sounds like a good learning experience with fairly low risk. (As long as the radon and mold issues aren't major.)