The risk-averse side of me says no way could I take this gamble, but still I wonder.So...what is your bet?

And it was zoned residental.. however it was on a free way off ramp access road.. and they had just built a shopping center one block over with a Home Depot Anchor.Then about 15 years ago One of the Vegas gambling concerns was able to lobby a local tribe and the property across the street was sold in what was and may still be the highest priced real estate transaction in Sonoma county at 230 million..

And it was zoned residental.. however it was on a free way off ramp access road.. and they had just built a shopping center one block over with a Home Depot Anchor.Then about 15 years ago One of the Vegas gambling concerns was able to lobby a local tribe to establish a casino.. 230 million for the land across from us..

@Mario Cuartas Hey Mario,I have done quite a bit in lower income neighborhoods throughout the years and I do understand your thought process about giving them a better property so perhaps they will treat it better.That is a gamble that sometimes works out and sometimes does not.The first thing to ask yourself when walking through the property is what makes it so bad?

Gambling addicts focus foolishly solely on the pleasure of winning.

New Kitchen: $9,800Total investment: $236,800Closing costs: $0 (went through his own company) 6 months of rental income at $2000/month = $12,000Taxes for 6 months: $2476 Insurance: $500Tenant paid all utilitiesTotal investment after 6 months: ($236800+$2976-$12000)= $227,776Refinance cost: $0 (own company)Refinance appraisal w/new kitchen and tenants having torn up carpet exposing hardwood floors: $259,00080% LTV = $207,200 loanTotal left in property after refinance: $20,5761.5 years of renting at $2000/month with PITI of $1426 = $574 on top of mortgage per month-expensesActual expenses: Vacancy: $0; Utilities: Tenant; Capex: $0; Expenses: $426.25 (oven igniter, lightbulbs, hvac servicing) Management: $0$574x18months= $10,332-426.25Total of own money left in house by time of option purchase: (20576-9905.75)=$10670.25Remaining mortgage after 18 months at time of lease option execution: $200839Sale Price to tenant: $270,000 done as a direct sale between my investor and his tenantNet proceeds to seller: $264,049.47 - $200,839 = 63210.47Profit of sale - total remaining initial funds = $63,210.47 - $10,670.25 = $52,540.222 Year profit on deal: $52,540.22 (taxed as a rental, not a flip) or $26,270.11/year. 

But I guess I would be gambling on speculation and that’s not a wise move. 

it's a real gamble, especially right now with so much demand driving auctions up.

It seems like a big gamble to guess at which option is more secure.

If the second unit does not have its own electric meter it should still work (worked for us,  we bought a home with attached apartment with our daughter who was a college student) also if the appraiser classifies the second unit as an accessory apartment or mother in law unit or casita instead of calling it a "duplex"   We're taking a gamble on a property right now where the underwriter said he believes the appraiser will be classify it as a single family with accessory unit (fingers crossed) this property is two separate homes with separate meters, so there's a chance appraiser will say the dreaded "duplex" and we wont qualify.