Hey everybody!  So my realtor comes to me with a deal, this is in CA mind you so some of you will flinch at the numbers.  $350,000 duplex, but it's worth $380,000.  So the current owner is willing to give me $30,000 at the close of escrow.  The place is in pretty good shape, but no air conditioning and it's in a bad part of town.  The comps show this to be a reasonable deal, but I'm not familiar with this part of town because I prefer to look for bad properties in good neighborhoods.  Has anyone ever bought properties that they wouldn't want to live in?  Are bad areas usually a good investment because they cost less, or are there higher vacancy rates and turnovers? ???


You’ve missed the entire point of evaluating rentals. The fact that this property is $30,000 below what the owner claims it’s worth is meaningless. Cash flow is what matters in rentals. What are the numbers? Gross rents?

I have a lot of rentals in areas that I wouldn’t live in. Yes, they can be a good investment. Yes, they have more problems than rentals in nice areas. However, this is putting the cart before the horse. It’s all about the numbers!


Mike’s dead-on…

“If it don’t make dollars, it don’t make sense”!


 Depending upon the debt instrument and the vacancy rates, this could be anything from 100s negative each month or 100s positive each month.  Is there any way that I can tell if the current owner is not telling the truth about vacancy rates or gross rental incomes?

Might also wanna read this recent post:;action=display;threadid=17842

I’ll assume you are say it worth $380k based on comp. Well in this market, that don’t mean jack because comps are rear-looking. The Calif is in decline so today it might be worth ??? There are a lot of motivated seller out there so don’t be afraid to offer far less than asking. Also, to be even close to cash postive, you would need to pulling well over 3000/mn in rent (more like $4k if you have high turnover). Even at 20% down, your PITI is going to be $2000+/mn (probably more like $2500)

As for neighborhoods, almost all of the properties I own are places I woudl not want to live.

MB in SoCal