Rehab of duplex as a investment property

[Jack Srimani]

Hi,
I have looked into a duplex in a good neighbourhood. The duplex is hundred years old and has two bedrooms in both the lower and upper unit. If the condition of the duplex is good this neighborhood can fetch 600 dollars each. This means the rent income will be 1200. The asking price is 74000. However the seller is motivated to sell and is willing to negotiate the price.

From the initial look of the property the following need to be redone:

1) Hard wood floor

2) Kitchen floor

3) Kitchen appliance

4) Some plastering and full painting

5) Replacement of original windows

Each unit is about 1100 sq ft.

If I can get this unit for around 50000 dollars then I am thinking to do a rehab of the duplex.

Specifically I would like to know the cost of hardwood floor refinishing.

Also the heating unit is one. I would like to have a separate heating unit for the lower unit. So that needs to be worked on. So I would like to get an estamate value to do so.

I have no idea of rehab of a house. So I would appreciate some guidance. I am trying to figure it out whether doing rehab of this is a good investment should I get the house at 55k. Once again I appreciate any help.
Thanks
Regards.

[Richard Warren]

Originally posted by Jack Srimani:

Specifically I would like to know the cost of hardwood floor refinishing.

Also the heating unit is one. I would like to have a separate heating unit for the lower unit. So that needs to be worked on. So I would like to get an estamate value to do so.

I have no idea of rehab of a house. So I would appreciate some guidance. I am trying to figure it out whether doing rehab of this is a good investment should I get the house at 55k. Once again I appreciate any help.

Refinishing hardwood floors can vary greatly. The easiest way to figure that out is to call a couple of companies and see what they charge per square foot.

Splitting the heating system could be very costly, especially in an older house.

The rest of your questions aren’t as easy.

Start by assuming you are going to rehab to flip. What would the duplex sell for in good condition? I mean a real selling price, not a wishful thinking price. Then apply the formula:

(ARV x 70%) â€" repairs = Maximum Purchase Price

ARV = After Repair Value

So you need to get a real selling price and a solid estimate on repairs.

Rehabbing to rent is a little different. You still need to have a solid estimate on repairs. If you use the 2% rule, meaning that the rental income should be at least 2% of the purchase price, you should pay no more than $60,000 INCLUDING repairs. (1200/2%)

The real red flag here is that you have absolutely no rehab experience. That being the case, remember two simple rules that will come into play every time: It will take a lot longer than you think and cost significantly more than you expect.

:cool: