They are side by side on the same .75 acre of land. The purchase price was $5,000.
They need about $17,500 worth of repairs total and when completed the FMV will about about $40,000 a piece due to the bad neighborhood. They will rent at around $400 per unit for a total of $1,600 a month.
My question is, since I have no savings and I’m currently living paycheck to paycheck, should I sell them or rent them once I’m complete so that I have more room and a spring board to make more deals?
Just a few questions. Why did you buy these properties? Do you have an exit strategy? Are you planning to flip or hold them? With no savings, how do you plan to get them in livable condition? You say you plan to rent them after rehab. Do you know how to find tenants and what to do if they don’t pay? I’d strongly recommend some reading and developing a plan.
Da Wiz
Actually, I’m 24 and I’ve been reading, studying, and dabbling in real estate since I was 15. I got my real estate license several years ago, but never activated it. I own my own home that has at least $80,000 in equity and have successully relocated several “free” homes to purchased property where I rehabbed them and sold them. I’m educated but not profoundly experienced in rental properties, I’m basically confident in what I’m doing and “going to do”, I would however like to hear more experienced opinions on the subject of these duplexes.
My personal opinion: rent duplexes.
That’s the grand total of my opinion on duplexes as a whole. Try and get them certified for Section 8 and such.
You’re telling us - total investment after rehab of $22,500 - total rents of $1,600 per month - FMV of $80,000 total after rehab. Considering the neighborhood, go with Sec 8, and CASH FLOW THOSE BABIES AND HOLD!!! If this is all accurate, you’ve found a potential money machine. With these rents, you’ll have more than paid for your rehab costs in the first year, then you’re grossing $19,200 per year thereafter. 
Hey,
Duplexes - gotta love 'em, especially them whats you got!
Peace,
Richard
I would rent them also. However, you will need money to operate them especially since they are in a bad neighborhood. You’ll need to run the numbers to see how they’ll cash flow. Expenses are MUCH higher in a bad neighborhood. You can expect frequent evictions, legal fees, damage from angry/unbalancedalcoholic/drug addicted tenants, calls from the city, dealings with the police, possibly fines, etc. All these things must be considered when you’re operating rentals in bad neighborhoods.
Mike
if you don’t have operating cash, then you need to sell. You say you have $80k in your home, then get an equity line. Otherwise, you’ll get upside down when you ahve the first trashed unit/eviction, dead hot water heater, etc.
Cash flow potentials looks good, but you need to figure out your REAL operating expenses (i.e. fully load cost, with utilities, taxes, insurance, vacancy rate, capital reserves, repairs, etc).