Quote from @Luka Jozic:
Thank you for that this is exactly the post that I needed and I learned something about appraisals as well so really appreciate it. Based on the comps you shared, despite the fact that mine will be slightly nicer with all major systems repaired, my guess is that 130K is more likely than 140K. And 130K still probably more likely than 135K. Like Nicholas said, the return is not good enough for this amount of work.
A few more thoughts.
I do like the 4144 Hyde Ave because it is the closest in quality and condition, to how yours WILL BE. So, if it was me, I may see a $140k or so, but again, someone who knows the neighborhood might have a different opinion. One issue is, that I am not seeing any other renovated duplex sales, so that leaves more up to the Appraiser's opinion, since there are less facts (i.e. data/sales, etc) which reflect how the market is valuing a renovated duplex. And it's difficult to argue with opinion. So, if you can find some more renovated duplexes in the general area, even just over a mile away (but similar neighborhood and market area), that may help give you a better idea of value.
On the rehab side, I do kinda agree with @Nicholas L.. The return % seems good, but the nominal amount seems low for the potential risk involved. Also, I didn't see if you said if you were experienced in rehabs, etc, or not. My other concern would be the full rehab only costing $42k. I don't know if that includes any contingencies or not. But, you are dealing with a 130yr+ old house, I imagine there could very easily be things an inspector or your contractor missed or can't see (inside walls, etc) and if you find those issues, that could easily throw off your rehab budget a TON! In my market, I have only dealt with 2 (maybe 3) ~100yr old properties, and at least 1 had a bunch of surprises within the walls, especially the bathrooms, where we had to reframe some walls, etc. We couldn't see those till the walls were opened. But, we had plenty of room in the deal, so it wasn't a big issue. In the photos of your Subject, a few of the acoustic ceilings look suspect, wavy, lines, etc. In my areas, that may be asbestos and may need remediation (not cheap, if done properly) and if it isn't, it still may need some work - scraping and finishing the ceiling, etc. that adds to the rehab costs. Or it may not need any of that, but those are the unknowns. So, as these risks go up, I personally, expect more of a potential reward from a deal.
Using your #'s, purchase and rehab = $108k, which is about 77% of $140k (assuming a favorable appraisal). That's not terrible these days, but not good on the lower priced properties/areas, like this. Again, not much room for error here.
My approach would've been to come up with an offer # that worked well for you, maybe closer to $50k or so, and find comps to support that ( I thought I saw 1 or 2), and present them with the offer and let them know that is the highest and best. It has been on the market almost 3 months, my guess is people aren't banging down the door to get it, but, again, I dunno!
One thing I tell new investors is, How much is it worth TO YOU, to OWN someone else's problem/s. I personally have owned properties that anchored me down more than propped me up.
