Duplex Opportunity in San Antonio

[Joseph Weisenbloom]

I have an opportunity from a wholesaler. Property is located in Northwest Los Angeles Heights neighborhood in San Antonio, tx. It is two houses on one lot first house is a 4/2 with 1500 SF the other house is 2/1 700 SF. Currently it is set up as all bills paid but I plan on separating water and electric meters and passing on to the tenants. 

The 4/2 is vacant and the 2/1 is occupied with the lease ending in January. The proforma rents appear high and are inflated because its all bills paid. The 4/2 was renting for $1400/mo and the 2/1 is renting for $900/mo so total $2300. I have received leases and rent receipts for 3 years to verify this but it just seems ridiculously high. Not sure what to think of this.

After doing a market analysis I believe I can get the 4/2 rented for $1100/mo and the 2/1 rented for $800/mo. Should be $1900/mo total after separating out the utilities. I can get the house for 100k purchase price. 

Repairs needed: Have not walked property with contractor yet. Need to do that. 2/1 is already rented. 4/2 needs some work to get it rent ready.

Immediate repairs:

Paint, tile, misc to get 4/2 rented: 5k

Separate electric and water: 7k

Differed maintenance:

Foundation needs leveling: 15k

Water heaters: 4k

Cashflow analysis

1900/mo Rent

Prop management  $190

Vacancy: $190

Maintenance: $190

Taxes: $225

Insurance: $166

P+I: $429

=$510/mo Cashflow

Cash outlays: 

20k down payment

5k closing

7k Seperate meters

15k foundation leveling

4k water heaters

51,000 total,

Cash inlays: 510 x 12 = $6120 Annual

CoC = 12%

On second thought this deal looks sort of borderline. Here are my issues the property is located next to railroad tracks. Feel like that may increase the vacancy rate. Anyone familiar with this neighborhood? Are my rents too conservative? Seems sort of crazy someone was paying 1400/mo to live here.

[Seth Teel]

I am very familiar with Los Angeles Heights.  My last flip on W. Wildwood is the highest sold comp in the last year.  I am also pretty sure I know the property you are considering.  I think your rent estimates are kinda high, and if it's the same property I am thinking of, I wouldn't buy for over $80K.  LA Heights is steadily increasing in property values, so there is definitely the potential for appreciation, but it will never be like Olmos Park Terrace or Keystone Historic District (two neighborhoods it's close to), it's a solid working class area not far from downtown that is seeing a resurgence in investment and young home buyers.  I would concentrate on flips in this neighborhood or SF rentals that you pick up for no more than $60K.  Just my two cents.