I am new to this and have been looking for a duplex, triplex, or fourplex for the last few months. I found a property is a C type neighborhood, surrounded by much nicer areas of the city. This property is a duplex, a block away from a main street and two blocks from a high end shopping mall. The duplex itself is on the fringe of this low income neighborhood and this is what worries me.
I want your opinions on whether this is a good deal. Right now each side of the duplex is rental at very low rents. The duplex next door is renting each 2/1 unit for $825 while this duplex is renting at $575. The reason is that the owners brother in law rents one unit and the other is rented to an ederly couple that has been there for 15 years.
The duplex has a brand new roof but the insides havent been updated in 15 years. I estimate that sprucing it up (not too much) would be about $5K to paint and clean the place well, and perhaps replace the stoves and fridges with used ones.
Cost of home: 140K
mortgage (principal + interest):$600 a month
Taxes: $250 a month
Water/Sewage/Trashpick up: $150 a month
Insurance: $80 a month
Repairs/Misc:$100 a month
Total Costs = $1180
If I am able to rent at the same rate as the duplex next door (same style and size as this one), I would be bringing in $1650 a month and netting about $500 a month
My total cash investment in this place would be $28K downpayment + $5K repairs, giving me a Return on invested capital of 18% per year.
It looks like a good deal but my hesitation is that I am not comfortable buying in a low income neighborhood. Also, I am not comfortable with my ability to sell this place after a few years. perhaps this is because I am new to the investing business.
can anyone offer some advice? take it or leave it?