Triplex & duplex deal in South Dakota

[Mariah Jeffery]

I am considering a possible deal on a FSBO triplex and possibly offering a package deal including a duplex as well. These are in South Dakota. I live in Portland, OR but it's close to impossible to find cash-flowing deals here, so I'm looking at paying my father in law to manage these properties.

Triplex:
- Fully rented for $1,500/month
- 972 sf + 972 sf + 564 sf
- Owner pays water/sewer/garbage (avg. $70/month according to utility co.)
- Remodeled within last 5 years. New exterior paint, some updates to interior
- Good part of low-income neighborhood.
- 0.2 miles from my FIL/property manager

If offering on this one alone, I will probably start off offering $125K and may go as high as $130K.

The seller has several other properties he is selling. The only other one of interest is a duplex. Here are the stats on it:

- Fully rented for $1,310
- 900sf + 800 sf
- Owner pays water/sewer/garbage (avg. $65/month according to utility co.)
- nice middle income neighborhood with mostly single family homes, good school district, views
- New sewer mains, exterior paint, and roof put in ~3-5 years ago
- Asking price $149.9K

I know the duplex is not great from a cash flow perspective, but I'm wondering if it's worth taking less cash flow due to the better neighborhood and therefore, better tenants and potential for appreciation, assuming I can get better than the asking price. I was considering starting off with an offer to buy both as a package deal for $250K. Then I would possibly go up to $255K-$260K.

Any thoughts?

One thing I should mention is my FIL charges on 5% for property management, but if that no longer works out we will have to pay 8-10% to a management company. He does an excellent job on the duplex we have now, but I'm afraid he won't have time for 7 units.

Another question is how to go about this when dealing with a FSBO. I communicate with the seller by phone and mostly email. Should I email back in forth with him until we settle on a price, or send my first offer over in the form of a contract? With a package deal, can I have one contract for two properties, or does it need to be two contracts?

Thanks for your help.

Mariah