Hi Im a newbie and started off thinking of rehabbing and flipping properties.
But my agent came across an REO duplex that needs repairs.
My question is how do I figure rents for a duplex like an apt or a house?Is there a way I could lease option each side to different tenants?
Or should I just convert the whole place to SFH and rent it? Lease option?
I’m trying to figure out if this is a deal and if so how should I go about it.
Publication Info
# of Units 2
Building & Community Features
View City Lights View
Annual Financial Analysis
Gross Schd. Income $15000.00 Gross Operating Inc $14000.00
Operating Expenses $3000.00 Net Operating Inc $11000.00
Gross Multiplier $5.07 Water Source District
Lot # 12
Listing Price: $75,990
REO owned and transfer of title on close of escrow.
I know I need rent info but besides what can I do with it if I use a hardmoney lender?
Is there a potential deal?
Thanks for your time!
I see 40 views but no answers.
If I’m not asking the right questions or if its in the wrong forum it would be nice to be notified.
I will just post this on another forum and I guess a moderator will close this one.
Thx
Just give it some time, most people are busy during the day, give a it a day or so.
The numbers you posted are BOGUS!!! Throughout the United States, operating expenses run 45% to 50% of the gross rents. So, here is how this deal would look in the REAL world:
Gross rents: $1,250 per month
Operating Expenses: $625
NOI: $625
Debt: ($75,990, 30 yr, 7% NOO): $505
Cash flow $120 per month or $60 per unit per month (too low for me)
I won’t buy a property unless the cash flow is at least $100 per unit per month.
Good Luck,
Mike
Jake and property,
Thanks for your input. I didn’t mean to be a douche but it seems like an eternity when your waiting for an answer.
Im thinking of putting in an offer of 36k since there is probably 20k of rehab.
Again thank you for your input.
One thing though…would it be better if I convert it to a SFH and option lease it?
Or is it possible to option lease duplexes?
Hey Vittorio301,
From one “newbie” (you actually showed me how to spell that correctly) to another - while sitting here after my first post and waiting for ANY response, I read your listing. I laughed bc I am in the middle of the frustration you posted!haha So fellow newbie, for what it is worth - here is another newbie’s two cents;
This economy is a tough time to think of future value. It is a great time to negotiate REOs. My first question to you would be “have you gotten inside to see the actual rehab potential and taken pictures - in bad lighting;)”. What was the last sale price of the property (www.ussearch.com; $20 package) before it was an REO and how long ago did the owner stop paying. This is important for your negotiating power. Why is it an REO? Being that is a REO at this time, a money draining headache for a bank that probably can’t afford it when they have too many of them, show them your research and discuss why you want to negotiate a price 15%- 30% below the asking price. We are in a time like never before and I am watching fellow investors enjoying this very thing you are questioning. This is a different plan from mine but their enjoyment is making me pay attention:)
The bottom line is the cost out of pocket. As a newbie - you can reduce the cost if you give reasons as to why. No newbie’s get to do that before now. After the reduction - then play the numbers. In a metro area; 2 is better than one. In a more urban area - the opposite. This advice is from a newbie so take it for what is worth. I live 5 miles outside of NYC and I belong to the NYC Cash Flow group as well as two REIAs in NJ. I am excited about finding a pile of dirt for under $100k at this time, knowing it might take $500k to build starting cash flow. Trust me - not rich. Yet, no scared either. Why? Because now is the time to go below any asking price. Low ball - be confident - and talk to your local banks about improving the neighborhood you are looking at and giving them rewards on your investment. Banks are more willing to give when they know they are getting more in your career of investing in the future.
I wish you all the best in your adventure!
I buy at rent times 30 minus repairs which includes splitting the utilities with exception of water if needed.
So, Your deal is worth $37,500 minus the 20k in repairs ---- $17,500. My repair costs are low because I hire a couple of jack legs to do the work so I am assuming that there is a high liklihood that the 20K in repairs for you may be 10K for me which would mean that I would pay no more than $27,500 for the house as long as I have confirmed the rent prices are accurate on Craigslist and the local paper.
Deals like that don’t typically come off the MLS though. Some do but most are from finding hardships.
THanks for your reply everybody.
Maybe duplexes are out of my league.
Im still thinking into converting it into a SFH and selling it as such.
But don’t know yet…I have to put more time into analyzing it.
Again thanks.
Always learning something new everyday.
Hey - don’t give up so fast! Don’t convert to a single family - don’t think about flipping anything for at least the next two years- and you do have an opportunity here. What is the community like? Is there a college or anything around that would require individuals to be looking to rent? How about major business’s that have employees who do international travel? Or the school system being exceptional and people leaving their homes but wanting to stay in the area?
Don’t walk away from this deal - ask more questions. Give us some more info to help. You were on the right track in reaching out - stay on track my friend:)
Hey In2bgr8,
Thanks for the pep talk!
Im not thinking about converting to a SFH.
What do you mean don’t think about flipping for the next two years…can you explain?
The duplex is 3 blocks away from a middle school on the same street.
I don’t know about employees with international travel .
The duplex is in an okay area.
Not exceptional but low middle class I believe.
I havent been able to find rents for the area. There are apartments that go for 900+ but no duplexes that I can find.
So I’m guessing they can go for 700 apiece for rents.
My agent says it has an ARV of 140k.
There is a similar duplex on the same street about a block away for 95k and it needs some work as well.
I submitted an offer of 55k.
Im not going to flip it or fix it…ill just try to wholesale it for quick cash.
And no I don’t have a concrete buyers list (meaning that they have shown me proof of funds)
I have some that I collected from doing ghost adds off of craiglist but they havent given me any details of what they buy. They just say give them whatever I have and theyll check. :rolleyes
Last week I went ahead and submitted an offer of 55k.
But the listing was taken off and my agent says that it looks like they took their listing with another broker. And she hasnt gotten confirmation that my offer was submitted.
Is that enough details?
Thanks for your input. I didn’t mean to be a douche but it seems like an eternity when your waiting for an answer.
Im thinking of putting in an offer of 36k since there is probably 20k of rehab.
That was the price if I was going to purchase it and rent it out for myself. But Im not going to buy/hold right now. I now in this area people buy/hold higher than 65% of the ARV so Ill just do that.
Let them worry about it. Besides here in this market there are no prices at 33k unless you go to the war zone area.