Purchase price $89,900. Duplex fully occupied with rents of $2,500. Leases expire mid 2025. C of O until April 2026. Separately metered with tenants paying all utilities. Mortgage payment of $870 PITI with 20% down at a 7.25% investor rate. Yes, it may need repairs, but I would have a $20k+ cushion for repairs in reserves. Yes, it may not be in the "best" area. I'm okay with that. My goal is to have enough passive income to retire within the next 10' years. I also plan on applying my net rental income towards principal only payments to shorten the life of the loan. Should I buy this?
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
1y
Yes, if you are confident in your numbers....particularly the repair/reno numbers. $20k is not much and will be eaten up real quick. That alone could ruin the outlook for you, so just make real sure of the physical condition of the property. I'd have a Home Inpsector and/or General Contractor go over the place and make a list (Scope Of Work) with a tight budget.
Specialist · Long Beach, CA · Member since 2011 · 875 posts · 394 votes
1y
It sounds like it's not in a very desirable area, based on the price and rents. That could mean poor tenant quality, which could lead to them not paying or eviction. Do you have a rent roll for at least the last 2 years, so you can see how it has performing? These kinds of deals look good on paper, but they usually never pan out to be good investments. You end up using the cash flow to keep it propped up. But if you are willing to take on that risk, then it could end up being good.