Hey BP crew!
First I wanted to briefly introduce myself, and bore you with some noobie questions :)
My name is Jared, I graduated college last year, and have been working a professional job as a VOIP technician/Systems Admin. My fascination for investing started around age 12 when my dad made me read "The Automatic Millionaire" in order to "earn time" to play video games. For every hour I read, I could play 1 hour of Halo. Haha, it was painful but, looking back now, I thank him.
Fast forward to a few months ago when I read "Rich Dad, Poor Dad" and realized that I was caught in the ratrace and don't want to stay there. Since then, I've been consuming investing material and listened to almost every single podcast on BP and am reading "Investing in Real Estate" by Gary Eldred.
*end of story, and on to real estate question*
I've been trolling realtor.com and zillow searching for my first home/investment property. I want to purchase a multi-family home, preferably with an FHA loan, live in one half and rent the other half. I enjoy fixing things, and am not afraid hard work. So here's the deal, last week a local Realtor showed me duplex that needed some work, but seems like a profitable deal.
Brief stats: cost of home: 75,000. Lower unit rents for $425. Upper half is vacant but was renting for $625. Taxes are $500/year and mortgage insurance about $500/year. On paper, this matches the 1 percent rule and the 50 percent rule. Also, rents in my area for this type of house range from $400-600, based on my craigslist and local paper research.
My thoughts: The bottom unit doesn't appear to need interior work. The upper unit needs TLC. The bathroom utilities are 70s color yellow(made with this color), the kitchen appliances are very outdated, it has the faint odor of cat urine, and most of the carpet looks like it was stolen from the Scoobydoo Mystery Machine. Upon purchasing the home, I would remove all carpet and give it a much needed deep-cleaning and paint all the interior walls.
Concerns: The utility bills seem very high, the lower unit ranges from $100-200/month and the upper unit is at least double. This doesn't surprise me too much considering the house was built in 1920 (pretty standard for houses in my area). My Realtor told me the seller could not provide the current tenant's lease without an accepted offer, but said it's a month-to-month basis now (sounds shady to me?). Also, the seller has never lived in the house and basically knows nothing about it.
So I guess my main questions would be, where do I go from here? I don't know the first thing to look for when it comes to roofs, or siding, or foundation or the "big things" to watch out for. Can someone help point me in the right direction?
Thanks a ton!
Jared
P.S. If you want to see the house: http://www.zillow.com/homedetails/925-W-Woolman-St-Butte-MT-59701/78194848_zpid/
