Help me analyze this twin duplex deal in rural Mississippi

[Spencer Anderson]

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*This link comes directly from our calculators, based on information input by the member who posted.

Hello, I have been watching this posting for a while on a local RE listing site and have been hesitant to move on it due to several reasons. ONE, it would be my first REI deal, TWO, analysis paralysis, THREE, its a fairly rural community,FOUR, no comparable properties anywhere around to get a property value. With all that said, it still seems as if it could be a good if not great deal if the numbers are correct. So here's the story:

The owner was a contractor who built 3 duplexes on his father in laws property around 1993, his father in law passed away and left them to his daughter/ current property owners wife. He and his wife have recently moved 7 hours away for his wifes health/ allergy reasons and do not want to manage the property long distance. 

He told me there is one tenant who has been there for 15 years and another who has been there 5 years. Has a list of people waiting to rent there and is getting $675 per unit. 2 years ago one of the tenants left the gas stove on with food cooking and it burned down the 3rd unit, due to insurance reasons he had to remove the building pad as well after demo. But the connections for utilities are still available, water, septic. The 2 units still in place are 2000 sq ft each and have 2- 1000 sq ft, 2bd/1ba units per duplex. He built them with low maintenance materials and just recently refurbished 1 of the duplex buildings with a new 40 year metal roof, new water heaters, refrigerators, dishwashers, stoves and AC units.

The 2nd duplex still needs to be refurbished but is currently rented, so this gives the option of forced appreciation. I spoke with him a few weeks ago and he said he had a buyer but the guy couldn't get financing through his bank due to the lack of comps in the area, as in this is the only duplex/ quad within 30 miles. He then said if he knew the guy was going to finance it out for 30 years he would have never even started the deal with him cause" hes gonna pay 150k in interest, this thing will pay for itself in 7 years if you just put the money right back in". So, in lies another issue, financing to please the seller!

I am wondering if the numbers I've plugged into the calculator are close to being correct. I got my own quote on insurance @ $2200 per year and it matched what he said, he says the taxes are $3300 per year and he pays for rent on the 2 propane tanks for gas to the units, tenants pay for gas, and he pays something like $50 a year for electricity to run the well pumps for water. Each unit has its own septic tank that he said was pumped out recently. I know that water is available at the road if I wanted / needed to connect, no sewer available, not sure about gas.

I created a cap expenditure spreadsheet to try and accurately evaluate the costs, but Im not sure about it. Ill try to insert a link for analysis if anyone is interested in seeing it, very basic.

What I am concerned about regarding finance is it tying up all my funds if I cant refinance to get the equity out within a few years. My new wife and I would like to sell our current home and purchase something we could live in and remodel for 2 years and sell to try and get out of a mortgage over a couple times doing the live in and flip method.

I apologize if I have overcomplicated this, if there is anything I missed please ask and Ill fill in the blanks. Of course this being our first REI, we want to make sure its a good one that will boost our confidence and understandings.

Thank you guys and gals