Advice on Properties to purchase

[James Fowler]

Currently we have a 3br, 1bath rented, and a 2br condo we are living in; looking to buy one or two more properties to move in one and rent the other. We are new to being landlords, new to being parents and planning on having my wife quit work! Any thoughts appreciated in this.

We put 2 offers this weekend: 1st) a desirable little house with a lot going for it that would make it easy to rent. It's probably worth 68K; but would cash flow 250 a month after all things included; we offered 58,500. This property would rent for 1.55% a month for a purchase price of 60K. It's ready to go and rented currently; not really an equity play with this. 2nd) a home we like and could live in for 5+ years as our family grows. It should go for mid 60's, and we offered 58,500 also; being worth about 80K currently. With 15K of updates should evaluate worth at least 100K most likely 110K; adding 3rd BR, 3/4 bath, siding and windows. Would also rent 1100+ if we desired to do so; 1.45-1.6% in monthly rent. Post deal picture(option 1): gaining 40K+ in equity, renting the condo and new SFR we would have $550 in CF additional after maintenance and vacancy. We should be able to handle this with breathing room. We would have a home that is very comfortable and a place we'd desire long term. All our rentals would be located within 3 miles.

Here's where the conflict begins; I had a property manager reach out to me and was looking to sell 2 duplexs for 140K; 3 of 4 units are rented. They are in a fairly desirable area also; however but up to mobile homes behind them. They are renting for 550-585 and should be rented for at least 650; the 2 duplexes I show to be worth at least 220K providing a ton of equity for the transaction it would be. The 4 if all rented would be getting at least 1.8% of the monthly rent for the purchase price. Should have at least 80K in equity from the transaction as well. Post deal picture(option 2): This would mean we shouldn't buy either of the other 2 we put offers on if we went this route; losing the home we desire. Pros: We would be gaining at least 80K equity, eventually get to $700+ in CF -maint and vac, and getting better percentage per dollar invested. Cons: may be a little harder to rent and keep occupied, speads our rentals about 20 miles apart, and have more tenants to manage. This is also financially a little riskier.

Which would you choose and why?

Thanks again for any thoughts!