Please help analyze my potential deal (Deal or No Deal)

[Daniel Guerra]

526 harwood street, Joliet, Illinois

Duplex x2 (2 bedroom 1 bath), electric heating, window a/c (bottom unit doesn't have a/c), no garage

The current tenants are paying $2,200 total for poor conditions.  Both tenants don't have working ovens or stoves.  The upper tenant doesn't even have the gas activated for whatever reason.  The place needs a new roof and has mold in the attic.  My contractor estimated about 20k in repairs and roof/mold will cost around 10k.  I don't understand how the tenants are paying so much.

The average rent in the area is $950.  The location has low crime rate, poor schools, city with plenty of amenities, etc.  This is definitely a class C property in a class C neighborhood.  It's a quiet neighborhood as far as I know.  You'll need a car to get around however.

This duplex is not worth 145,500 and most likely never will be.  The 115,500 is probably the value of the duplex with very little repairs.  Unfortunately, this place requires a good deal of repairs.

Thanks for reading.  Any advice would be appreciated.

[Scott Hensley]

Daniel,

It sounds as though you may run into much more in repairs than expected.  If the unit is truly in that bad of shape and has mold in the attic then there is a chance of it also being found in the bathrooms, etc.  To me $10k for roof and mold remediation seems a bit low.  I would certainly take a hard look at the structure and look for possible areas that have been overlooked.

As for your other concern, $2200/ mo is very suspect.  Have you been able to confirm this with proof of payment or lease agreements?