Newbie Needs Help! Under contract in CA.

[Hannah Jones]

Hello,

I am under contract to buy a duplex in Yuba City, CA, for $200K. At first I was really excited about the deal because most stuff I look at doesn't even begin to pencil out. A couple of investor friends gave me the thumbs up. But the more math I do, the more nervous I get.

It is currently rented out for $800 per unit. Owner pays garbage and water, which is $110 per month (total). My realtor told me that the units could rent for $50-100 more each, but there are two great tenants in the duplex, and neither one has any intention of moving out, sot I am loathe to increase the rent too much.

The duplex has new water heaters, central AC, and heat. There is minor wear and tear, but not much. It was built in the 80s and it's in a low B or high C neighborhood. The bad news is that it needs a roof this year. But when that's done, it should be relatively maintenance free.

I live 3 hours away, but I plan to manage it myself.

So, it obviously fails the 2 percent rule and the 1 percent rule, and with the 50 percent rule, I end up about $10 ahead of game on a 30 year mortgage. When I do more fine-grained analysis, it seems better. But is this just a dumb deal? If so, why is my realtor telling me it's amazing?