All Forum Posts by: Tiffany Norte

I talked to my realtor again about the roof. We had submitted an request to resolve the unacceptable conditions for the roof. I thought that just meant patch it, but she said that it is for replacement. They're supposed to be getting it completed on Monday, so we shall see. I think we might move ahead if it is a complete roof replacement. I re-ran the rest of my anticipated costs. The tenants cover all of the utilities, and the building is in otherwise good repair, so there aren't many regular expenses. One of the tenants is month to month, so hopefully we'll be able to get one of the units bumped up on rent soon.

I have a contract on a duplex in Independence, MO. We've done the inspection and appraisal and everything looks good, just the roof is a little old, no big deal. The contracted price is $110k, appraisal came back at a value of $111k. My problem is this. Normally I prefer to make sure I have room for maintenance, vacancies, management, etc and I look for a purchase price around rent x 70. When I first looked at this property, the rents were stated at $675 per side. During the due diligence phase, the rent rolls came back with $675 and $600. Now I have the leases in hand, and they are only $615 and $600.  I'm really just not sure that it's worth the purchase price of $110k now. At these rents I would only be looking to pay $85,050 for this property. 

So my question is do I move forward and spend an extra $25k over what I would like to spend on this property or do I cut my losses (about $2k) and cancel the contract? I'm out of the due diligence phase now, so I'm not sure that I can renegotiate. Is my rent x 70 even a reasonable place to be looking? I'm afraid I'm limiting myself only to run down units, and this one is in pretty good shape...