Newbie's first deal: Am I walking into a minefield with this one?

[Jeff Taylor]

I haven't made an offer yet, so please let me know if I am about to make a mistake!

Here are the details:

This is a city lot in a low-income area. There are three buildings on the property.

1/1 duplex @ $200 mo. per side

3/1 old and ugly SFH @ $400 mo.

Old and ugly mobile home @ $160 mo.

Total income = $960 mo.

Yearly income = $11,520

Yearly taxes = $2,000

Vacancy @ 10% = $1152

Maintenance = $ ???

Insurance = $ ???

All units are currently rented to long-term tenants (according to the broker).

The MH is non-compliant with current zoning, but is grandfathered in. It cannot be replaced and if left vacant for longer than four months, must be removed.

The duplex is simple and basic but looks to be in good shape.

The SFH is old, needs painting on the outside, and I am worried what the inside looks like.

Zoning allows for up to eight units on the lot, for whatever that is worth.

I can buy the property for less than $40K.

The numbers seem like a no-brainer to me. As you can imagine, this property is not in a great area and it is not likely to appreciate significantly in value. But that cash-flow!

Here is my newbie thought, "Getting this for less than $40K gives me room to make repairs, and with all units occupied, maybe significant investments won't be for a while."

Please either tell me I can't pass this one up, or talk me off the ledge, as you see fit.

Thanks!