Purchasing First Rental Property - Duplex

[Devin Janke]

Hello, this is my first post on biggerpockets but have been following the podcast closely and reading many of the books suggested on here. I still have a ton to learn but I've made up my mind on jumping in head first and buying a duplex. I found one in my local market that I am interested in and going to check out tomorrow. I've been pre-approved for a 170k loan at 2.75%. The duplex I am looking at has been on the market for almost a month and listed at 165k. Depending on how the inspection and everything goes I will probably offer less as anything that's fairly priced in this market right now is selling within a day or two. Background on the house... has forced heat, no central air, built in 1920s, recently renovated in 2010, two current long term tenants paying $825 a month + utilities each. I used this rental property calculator with very very conservative numbers to determine if this might be worth it, which it seems to be. Tomorrow I plan on calling local property managers and asking about local vacancy rates. I have a long list of questions to ask the sellers and I am wondering if its appropriate to email them a list? Like when it was updated last and what was updated? Roof, windows, electrical, plumbing? Why are they looking to sell the property? When current leases expire? And then have them sign/fill out an estoppel agreement.... Going to use this post to document my process! Feel free to give thoughts/advice.

[Will Fraser]

Hey @Devin Janke, welcome to the BP forums!  You've got a good path forward planned out here.

The one mindset thing I want to encourage you to tweak here is about the price/value of the home -- I see people making this assessment every day and it monolithic and rarely ever as simple as:  the home has been on the market longer than the average Days on Market so somethings wrong (price, terms, or condition).

It MIGHT be true, but there are a dozen other things that might be true.  In fact, after seeing the rent rates the thought that popped into my head was "if it were me I'd be sitting fat and happy with that cashflow, but I'd still advertise it for sale at my "make me sell" price and be tickled by the cash-out if it came."

I share this to encourage you not to pass up a deal if it is a good one, simply because it has been sitting longer than average.

Go out there and get it!