Deal help in Ogden Utah

[Craig J Chelette]

Hey all,

I have a duplex under contract in Ogden Utah.  It is a 2/1 with 700 sq/ft per side. Asking price was $154900 and offered $144900 and was accepted.  Roof needs to be redone. One side had a tenant who smokes in the unit. I am thinking about removing both tenants asap and trying to get the smoke smell out but removing all carpet, whipping down down every surface, getting ducts cleaned and running an o-zone machine if needed. There is about $16,000 worth of work that I can calculate from paint and new flooring.  I am pretty sure the seller will not budge on price anymore.  I need help determining if this is still a good deal.

Numbers:

Sale price: $144,900

Rehab: $16,000 including new roof (roof is about $8,000 and has 2-3 years left so doesn't have to be done immediately)

Down payment (25%): $39,500

Debt service: $711 PITI, HELCO payment $326 (interest only would be $118 but want to pay back principle ASAP) . Total: $1,037'

Current rents per side: $600. should be able to get up to $700 with rehab.

Cash after debt services:  rent $600 per side- $163

                                         rent $700 per side-$363

In this area, its difficult to find deals in the 1% rent to purchase price ratio.  

Let me know what everyone thinks. Am i missing anything? I will keep all cash after debt services till i build up a nice cushion, then start putting even more towards HELOC principle since it is a variable rate. Thanks!