Good investment???

I have an opportunity to purchase this property. Is it a good deal???

It is a duplex that has rental income of $935/month. The owner pays utilities that average $220/month. Taxes for the 07 taxes are $1144. With 95% occupancy rate since 2001. Price $69,900

Here is some more information I received from the realtor.

  1. Yes, both units are occupied
  2. Both have been there 5-6 monthes
  3. I have met with both tenants, they both work at Rapid City Regional, and both seem more than willing to stay.
  4. Based on 95% occupancy rate, $2640/yr for utilities, $1144 taxes, and $1200 misc expenses, the cap rate is .093%
  5. Divorce (out of town owners ), and neither party can or wants to buy the other out.

It is located on the main road out of town with 500+ vehicles per hour passing it so my thought was to rent it and maybe purchase more of the surrounding homes and turn it into a commercial area after awhile. This section of homes in this area are the only residential left. Everything else is commercial.

Any thoughts on this deal???

It’s definitely a loser as a rental. The purchase price is too high. In addition, I never buy rentals that require the landlord to pay the utilities. That’s an invitation to disaster.

Mike

, I never buy rentals that require the landlord to pay the utilities. That’s an invitation to disaster.

I agree totally…I never buy properties that I have to pay utilities…