All Forum Posts by: Nick Ferguson

@Amir B., I agree with @James Wise in the rent of $1100 is a little optimistic.  All in all though, it doesn't look like a bad deal.  I'm not nearly as experienced as James and don't have any investments in Parma but I do live in Parma and have looked for property in Parma and most rents I've seen for 3/2's have ranged anywhere from $900-$1,050 depending on location and property. I ended up getting a property on the other side of 480 because it was more in my price range at this point.  I'd love to get into some Parma property some day when the Parma market is a little cooler. 

Thanks @Kyle Mccaw

@Scott Harper , I did not meet the tenants officially.  I did meet one of them during the showing of the house with my realtor but no "interview" or anything.  I was able to review both lease agreements during the due diligence period and I am comfortable with those.  I will be transitioning them to my preferred lease when the current one is up, but I have no big problems with it.  I guess I am figuring that I am evaluating the house from a long term perspective and on the chance that I do inherit bad tenants, it will be a learning experience that won't be a big deal in the grand scheme of my life 5 or 10 years from now. 

I just picked up the keys on my first "true" deal.  A duplex in Cleveland only 10 minutes from my house.  I say it's my first "true" deal because I do have one other property but I had no idea what I was doing with that so this is the first one I truly evaluated as an investment and purchased using the "correct" process. 

I'm nervous and excited and look forward to the future.  Feel free to check out my Blog Post about the whole process.  It's long, and mostly a record for myself so it's probably a boring read but if you're thinking about getting your first deal, it may put the length of the process into perspective for a new investor who does this "on the side". 

Will, 

Obviously every situation is different and I don't know your goals but just looking at your numbers, that doesn't seem like a good deal even though you can put $0 down.  Financing can make a good deal bad but it can't make a bad deal good.  Assuming you don't intend to live in the duplex forever, you need to evaluate it as a straight up investment and even if you were able to get $2200/month total, your margins would be pretty slim after paying your mortgage and accounting for all expenses (utilities, repairs, maintenance, capex, vacancy, etc.).  Also, I think that unless you are really experienced in rental rates in a given market, basing your numbers off what they actually are currently instead of a wish or hope based on what they could be is far safer.  Feel free to PM me with any questions and I'd be happy to trade stories/advice. 

@Cody Barrett

I just ran into this exact problem and came here to search BP for an answer.  This is the only post and no response so I called a local HVAC place that is licensed to deal with asbestos for a "ballpark" .  They said, to just replace the ductwork, it would likely run around $1,500-$2,000 for a duplex assuming the ducts go in the same directions.  

 To completely replace both units and the ductwork with it, ballpark was $6,500-$8,000.  Obviously, your market may be different so I would just do what I did and call a local HVAC place. 

So I just looked at a house with a lot of potential and I would like to make an offer.  It may be an offer that will not be accepted because of what I will require before closing but you will see that.  Here is the situation and then a few questions. 

It is a duplex listed in the mid 60's.  The house currently has tenants paying a total of 1300 per month.  Current owner has had the house over 5 years and it has some significant deferred maintenance but none of the traditional red flags like structural/foundational issues etc. I wasn't able to look at the roof in detail because of snow but from what I could tell in the spots that were visible, the roof is old but in decent shape. 

Problems #1.  The house has wood siding that definitely needs scraped and painted.  As I have never dealt with wood siding, what is everyone's experience with it?  My realtor stated that it was more costly to take care of wood siding which does make sense.  

Problem #2.  There is a garage that is in serious need of repair.  The roof has holes in it and it looks to be leaning.  I think it is quite obvious that it should be knocked down.  The current tenants don't have garage access so it wouldn't hurt rent rates.  Any drawbacks to knocking down the garage and NOT replacing it for a rental duplex?

I'm thinking of offering at or slightly above offering price contingent upon knocking down the garage and scraping and painting the siding.  What are your thoughts in general?

Cleveland, and all of Ohio really is great.  @Rohan J.  is absolutely correct though about the property taxes.  I'm very conservative in that I'm only really willing to purchase a "sure thing" and the property taxes kill most of the deals I've analyzed.  I have one in a rural area of Ohio and property taxes are half what they are for similarly valued properties around Cleveland.   But prices are great and cost of maintenance/repairs/living in general are not bad. 

@David Faulkner .  That table is great!  Thank you very much.  What market was that made for?

I've been using the following template to evaluate houses (thanks to whoever uploaded it).  I run admittedly pretty conservative numbers on both sides.  Also, I plan to self-manage but I want to stress test each property as if it were being managed so that I can step away some day.  This is just a sample of a house I looked at but it is indicative of the problem, nothing seems to cash flow.  Are my expense numbers too high or am I just finding "deals" that aren't really deals and I just need to keep looking?  Please give me your honest opinions about the numbers and the evaluation. 

Well... I guess this means these houses in the city will be worth less.  I'm curious how this will affect actual land lords and I may choose to avoid buying in Cleveland until I find out.  Then again, could be an opportunity if the market softens.