The Christmas Duplex: First Discussion

[Jim K.]

In the past few weeks, I have repeatedly stated that I would like to dissect my latest deal and all the odd particulars about it here on Bigger Pockets, both to show others how the sausage actually gets made but also to hopefully learn something.

I closed on the property yesterday, 12/21. I bought the duplex by selling another house I owned and putting the money in a 1031 exchange. Bigger Pocket's @Dave Foster was my Qualified Intermediary and I would urge anyone doing this the first time to consider contacting him. I On the selling side of the exchange, I was lucky enough to be working with my long-term agent. In 28 years of experience, he'd never done an exchange. On the buying side of the exchange, this duplex, I was lucky enough to be working with my long-term closing company. They do three exchanges a year or less.

This is very obviously what usually happens down here in small-scale C-class rental real estate. Under these circumstances, it's best to have highly-experienced QI people to handle the transaction, and that's what I very obviously got through Dave Foster.

I am currently down for the count with a moderate bout of COVID-19: pneumonia, gastrointestinal symptoms, the works. I think I'm on the back end of it now. At least I have some time to write about this crazy deal.

So here are the basics: the property is an over-under purpose-built duplex with tenants in place. Two two-bedroom apartments with one bathroom each, no garage. Rent roll is $650+$610. Tenants have been living together for 8 years and like each other.

Cost: $110K, paid for in full out of the 1031 exchange.

Annual combined taxes: $2720.03. Due to problems with the Allegheny County tax assessment system, this will likely jump quickly to $4286.59.

I do not have an insurance policy on this property yet.

So...any questions so far, people? This rabbit hole goes very, very deep...