Purchased First Property in Lakeland Florida

[Michael Tyiska]

Hi all,

This is my first post but I would like to thank Biggerpockets forum for helping us close on our first duplex today. My wife always had the motivation to get into real estate, I'm a computer engineer and had no interest. However over the last year she convinced me and then I caught the real estate bug. I've read so many posts and books on the subject and decided to jump in. I'm really excited to start this journey and I honestly believe this process would have been nearly impossible without the Biggerpockets forum. 

My wife and I are investors in Polk county (Lakeland, Winter Haven, Haines City etc) so if anyone has any questions or would like to collab feel free to reach out.

A little bit about the property

I'm sure I will get scolded by much savor investors when I tell you the number but keep in mind that this was our first investment property and we wanted to get the experience.

Purchase price: 162,000

Property Type: Duplex

Monthly Income: Existing tenants pay $600 each side (below market)

Condition: Really good

Neighborhood: B area

When i ran the numbers against the 50% rule the COCROI is -2% but the actual numbers after getting financed are 3% COCROI with the potential to be 14% if we raise the rent to market rate. We reached out to a Property manager and was told that the rents for the area are easily 900+.

We were able to get the seller to put 50% up for the roof so we will have a new roof which will help bring the capex down. ($4800+ 20% overage incase the work goes ).
 

My wife will manage the property so that 10% will come back to us as cashflow.

Problems

The only problem that we currently face is the property has existing tenants who are on month to month but have been there for 5+ years each. We really don't know how to approach the rent increase discussion.

A) We could keep them at $600 on month to month

B) Have them sign 1 year lease for $700

C) Give them the choice to sign for $700 or month to month for $850

We welcome to any feedback and suggestion. Again, thanks Biggerpockets forum for all the knowledge.