Please Analyze This Duplex

[Zach Davis]

I've come across a duplex in my area that is for sale for $125k. Both sides are 2 bedroom, 1 bath and approx. 780 square feet. It is a bank owned property and the bank is only accepting cash offers. My contractor and I have estimated that it will need approximately $20k-25k worth of repairs, mostly consisting of flooring, paint, and cabinetry as well as a few windows and doors and exterior paint. Much of the work will be done by me so labor costs will be low. It's slated to take 1 month. That will put me somewhere in the neighborhood of $150k total investment and the ARV will be $200k. Market rents on the finished units are $875-$925 per month. Yearly utilities are approx. $3000, insurance is $500, the vacancy rate for the area is around 6%, and property taxes are $2900.

The idea is that I could buy the property and rehab it for $150k, then finance it at $150k with a standard investment mortgage, pull my initial investment out and have a moderately cash flowing property with no money invested on a long term basis. I do have another duplex in the general area so I know the listed operating expenses are pretty close. Any input you have would be greatly appreciated.

[Kou Vang]

Go to Craigslist and post your duplex for rent. Say everything about your work that will be put in and that it will be available next month (or whenever it is). Also state the price of rent and any other fee's. This way you would have renters beforehand.  Also if you don't get any response, it may be a bad idea. That's what i would do before buying a rental.  Best of luck :)