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Updated about 7 years ago,
Low Income Area Duplex Advice & Analysis
Hello everyone,
I'm seeking the wisdom and experience of all of you out there on my first deal. I would love your evaluation of the property's numbers but also my mindset going into this.
I have been looking at multifamily properties in lower income neighborhoods north of LSU (Baton Rouge, La) This is mainly due to the fact that it's the only area I can afford but also for cashflow.
While you know nothing about me is this the wrong place to start? Should I just save up and shoot for a great location? Am I being to hasty and blinded by my desires to invest?
And now that you have seen deep into my thinking the numbers...
Duplex, 4 bedroom 2 bathroom
1100 sqf
Cinder block walls
A/c wall units
Listed at $50k
would shoot for a 15-25k price. It sold in 2014 for 37500 and looked a lot better then.
But let's say $30k
Would do a renovation loan for $43k at 6.5%
(80% of price, 23k+ 15k rehab cost) assuming financing comes through
Rehab cost $15000
Purchase cost 3%
Tax $500
Insurance $500
Maintenance 12% -$1872
Cap ex 10%- $1560
Vacancy 10% - $1560
Gross rent $1300* 12
15,600
So what is your take on this property? Does any of the numbers look way off or throw up red flags ?
Thanks for your time.