Is This a Good Deal or Should I Run?

[CJ B.]

Hi Bigger Pockets! 

Great to be a part of the discussion. Been lurking for quite awhile, first time post! 

Hoping to get some opinions on a potential deal I am in the middle of doing.

First, a little about my Real Estate background. I am a former Appraiser "Trainee" stopped just short of getting my full license when the market crashed in '08. I am also a landlord with some rentals of my own, and current investor.  I live on the West Coast in beautiful San Diego, Ca. 

So here are the deal(s)-

Seller's Background: Older, retired & offloading his portfolio wants to get out. Houses are located in midwest, Indiana. 6 Houses total. Houses range from 15K-25K each. They are rated in "C" classification, but not Section 8 so far as we know.

Some deferred maintenance on each house. But on the surface they look good.  I have a reputable Property manager lined up, who is also vetting the real estate deals i,e doing video walk throughs, taking pictures and meeting tenants, purchase contracts etc...

5 of the 6 houses have tenants. And so far, I am only interested in 3 of the "better" units. 

So..... total overall deal would be 60K, Cash Offer for 3 Single Family Homes All Tenant Occupied.

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House #1-   Duplex/Converted to Single Fam

4 Bed 2ba. Rent- $925/mo . Tenant Pays all Utilities including water. Tenants Do Yard Care. 

TOTAL RENTS: $11,100/yr Sales Price $25K

Costs: 

• Insurance $759/yr
• Prop Taxes $446/yr
• Prop Management $100/mo

*10% maintenance costs for issues: $1100/yr

SUMMARY: $7,595/Year ROI

Cons: House is next to railroad tracks. Train is loud "but doesn't rattle house" according to tenants. Visible leakage in kitchen ceiling. Located in midwest market. Houses show have show little next to no appreciation. 

Pros: Tenant wants to stay. House was once a duplex, could be reconverted? 

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House #2-  Single Fam

3Bed 1 Ba. Rent- $675/mo. Tenant Pays All Utilities/Water. Tenants do Yardcare.

TOTAL RENTS: $8100/yr Sales Price $20K

Costs:

• Insurance $950/yr
• Prop Tax $446/yr
• Prop Management $100/mo

*10% maintenance costs for issues: $810/yr

SUMMARY $4,694/Year ROI

Cons: Raccoon issue. Tenant owns all appliances. 

Pros: Tenant wants to stay. 

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House #3   Single Fam

3Bed 1Ba. Rent- $650/mo Tenant pays All Utilities/Water. Tenants do Yard Care. 

TOTAL RENTS: $7,800/Yr Sales Price 20K

Costs:

• Insurance $648/yr
• Prop Tax $411/yr
• Prop Management $100/mo

*10% maintenance $780/yr

SUMMARY $4,761/Year ROI

Cons: Couple surface electrical issues. 1 switch controls 3 lights. 

Pros: Tenants want to stay. No Spigot for yardcare. 

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Yearly Cash Flow/**Fully Occupied** is $17,050

Offering price for all 3 properties is 60K 

Am I missing any $$ figures? Everything is pending home inspections. So maintenance costs are what we can see on the surface. 

I would be managing this from afar. The property manager has 40 other properties in that area, and she comes highly recommended from a friend who has a rental in that area. She also said, she would take them on. 

Any help, thoughts, opinions, comments? 

Thanks so much you guys. This is such a great resource and valuable for all of us. 

Cheers!!!