Help with duplex, BRRRR or continue renting

[Luka Jozic]

I am under contract on a duplex in the 44102 area at 66K that has been cited for lead by the city. My initial idea was to buy cash, vacate the property, and do a BRRRR (the property needs a decent amount of work) and refinance asap and find my next deal. However, it seems like I have the option to do conventional and since the property has tenants in both units paying like $600/mo each, I was thinking is it better to maybe do a conventional and bump the rent to maybe $750 a month? If I do that, I can't do a cash out refinance for a year. Sure I will have more money in my pocket, but I wont have enough to buy something else cash until I save some more. Additionally, if one (or worse, both) tenants move out then I will have to put money into making it rent ready, but I won't be able to refinance for another year meaning even more of my money will be tied up. I guess one solution to that is to see if I can get them both to sign a new 1 year lease but that might be hard before I take ownership. I do know both tenants want to stay, but Im not sure how they would feel about a rent bump.

Rates right now for a cash out refi are around 6.5% with 2 points which is pretty good. I don't know what they might be in a year. Im really not sure what the best play is here as I feel like there are pros and cons with either decision. 

[Vadim F.]

Quote from @Luka Jozic:

Quote from @Bob Stevens:

Quote from @Luka Jozic:

I am under contract on a duplex in the 44102 area at 66K that has been cited for lead by the city. My initial idea was to buy cash, vacate the property, and do a BRRRR (the property needs a decent amount of work) and refinance asap and find my next deal. However, it seems like I have the option to do conventional and since the property has tenants in both units paying like $600/mo each, I was thinking is it better to maybe do a conventional and bump the rent to maybe $750 a month? If I do that, I can't do a cash out refinance for a year. Sure I will have more money in my pocket, but I wont have enough to buy something else cash until I save some more. Additionally, if one (or worse, both) tenants move out then I will have to put money into making it rent ready, but I won't be able to refinance for another year meaning even more of my money will be tied up. I guess one solution to that is to see if I can get them both to sign a new 1 year lease but that might be hard before I take ownership. I do know both tenants want to stay, but Im not sure how they would feel about a rent bump.

Rates right now for a cash out refi are around 6.5% with 2 points which is pretty good. I don't know what they might be in a year. Im really not sure what the best play is here as I feel like there are pros and cons with either decision. 

 STILL working way to hard, and NO you should NOT buy this property, ITS BEEN CITED FOR LEAD from the city!! RUN away 

BTW 600 is terrible, 

Why would I run away? It doesn't really seem that hard to fix. And yeah its 600 because of the current condition. The idea is to add value and raise the rents.

 I would highly advise having an inspector or gc walk the property one more time before you close. This can be a huge can of worms that you don’t want to deal with as a first investment.