The duplex next door to me is up for sale. I know the owner and we are talking about me possibly buying it, which I could do in cash. I don't think I can make it work at anything close to what she is asking: $245,000. Here is my thinking:
I could make 7% real, on average, in the market: $17,000 a year.
Even assuming nothing needed to be done to the duplex (though at least one of the two water heaters is from 2011, and the furnace is about the same vintage. No idea about the a/c, and the windows look original, from the 1970s), and even assuming I could rent them fully for $1000 a month each, with no vacancies, I can't make close to $17,000. The taxes on the building are $7000/year (really), and assuming maintenance costs of $4000 a year, that makes only $13,000 a year. And that's with a lot of rosy scenarios.
There is currently a tenant whose three year lease is ending soon who pays $823. The other half, the landlord runs as an airbnb that she manages herself--pretty successfully from what I can tell. My guess is market rent is more like $950, possibly $1000 a month.
It seems obviously not workable--and yet somehow landlords make money in this town, or they wouldn't be doing it? She bought the unit in 2021 for $155,000, and cosmetically fixed up one of the two units (the airbnb one) and put on a new roof. Zillow, for what it's worth, estimates it to be worth more like $210,000--but I can't see it working even at that price. And I'm not willing to run an airbnb.
Am I missing something obvious?
I could make 7% real, on average, in the market: $17,000 a year.
Even assuming nothing needed to be done to the duplex (though at least one of the two water heaters is from 2011, and the furnace is about the same vintage. No idea about the a/c, and the windows look original, from the 1970s), and even assuming I could rent them fully for $1000 a month each, with no vacancies, I can't make close to $17,000. The taxes on the building are $7000/year (really), and assuming maintenance costs of $4000 a year, that makes only $13,000 a year. And that's with a lot of rosy scenarios.
There is currently a tenant whose three year lease is ending soon who pays $823. The other half, the landlord runs as an airbnb that she manages herself--pretty successfully from what I can tell. My guess is market rent is more like $950, possibly $1000 a month.
It seems obviously not workable--and yet somehow landlords make money in this town, or they wouldn't be doing it? She bought the unit in 2021 for $155,000, and cosmetically fixed up one of the two units (the airbnb one) and put on a new roof. Zillow, for what it's worth, estimates it to be worth more like $210,000--but I can't see it working even at that price. And I'm not willing to run an airbnb.
Am I missing something obvious?
Statistics: Posted by Roothy — Mon Jan 20, 2025 1:43 pm — Replies 26 — Views 958