To get the air vents cleaned alone was $540

My wife and I door knocked last Saturday. A few days later we got a very receptive response from an owner who we had left a brochure at the door. They were interested in getting a cash offer. The next day all communic...

I would assume you would want to budget for roof 25 year life span, hvac 20 year life span, appliances and hot water heater 12 year life span, bath and kitchen remodel 15-20 year life span, etc.

My professional background is retired military and currently a Federal employee with the Air Force as a Human Resources Supervisor.

I would never pay over the appraisal value for a house unless it was in a very hot market and I personally needed a place to live. 

@Richie ThomasThinking through this after what you mentioned I think the owner is scared to sell it outright because he would be in hot water due to the condition and the tenants are likely not safe to what the county would expect.

If I go by the 50% rule it doesn't seem to be a good buy but seeing as the tenants are  paying for all utilities I would thing the 50% rule may not apply.The duplex has the original furnaces with central air, roof and appliances.

You basically bought 2 houses in a really hot area for $187.5K each.  

I also sit down with the tenants while signing the lease and have them initial, in blue ink, the "hot buttons", i.e.: no pets, maintining property appearance, etc.

I know the market is hot out in California.