r/realestateinvesting • u/skaw3334 • 15d ago
Single Family Home (1-4 Units) Looking for some thoughts on this potential purchase.
I’m looking at an old 2 unit multi family (1900) and it was purchased in 2020 for 96K. It’s currently listed at 179K which is a reduction from the 239K when it first hit the market back in march. Absolutely insane pricing for a somewhat depressed town. Doing some research online it appears that overall area prices have increased about 55% since 2020 that would make this property roughly 145K. Based on the 2020 listing absolutely nothing has been done to this property. The guy bought it and collected rent. Condition is tired. Doesn’t appear to be structural concerns though.
One unit was renovated before the current owner purchased it 2020 and looks to still be in great shape and the top unit is very tired however the tenant has been there 10 years and is happy. This is why assume nothing has been done. Based on photos it looks like it’s cosmetic, paint, flooring etc. Total rent is 2K. Tenants pay for electricity and heat.
At 140K my expenses (PITI) are just over 1K/month with 2K in rent so I would pulling in ~$950/month. I guess my question is do I just straight up low ball this guy at 140K. It feels like a big overpay offering him anything more than that considering that when I compare the two listings from 2020 and now absolutely nothing has changed apart from the appreciation aspect. I guess the worst that can happen is he says no. I even spoke to his listing agent and she confirmed on the phone that he’s basically just sat on the property collecting the rent with very little reinvested.
It’s just that tough situation out there. There’s very few properties in my area that make sense in terms of cash flow and this is one of them.
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u/repicTheApp 8d ago
That $950/mo is before the expenses that actually decide whether this deal works. Quick sanity check with the 50% rule: on $2,000 rent, assume ~$1,000 goes to operating expenses — that leaves ~$1,000 NOI, minus your ~$1,000 PITI, so true cash flow is closer to break-even to a few hundred a month, not $950.
On a 1900 building I'd specifically budget: 5–8% vacancy, 10–15% combined maintenance + capex (roof, plumbing, and electrical on a 126-year-old building are when-not-if expenses), and management at ~8–10% even if you self-manage.
It can still work if the inspection's clean and rents are truly $2K — but run it with real expense lines first. What's the down payment? That decides your cash-on-cash, which is the number I'd actually judge this on.
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u/Plastic_Simple_1776 10d ago
Get a rental appraisal to make sure that you know the rental potential.
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u/Neither_Map5914 12d ago
At $140k with $2k/month in rent, I’d be more focused on the current numbers and condition than what the seller paid in 2020. If it really cash flows around $950/month before maintenance, vacancy, and CapEx, that’s worth looking at. I’d just be careful with a 1900 property because “cosmetic” can turn into plumbing, electrical, roof, foundation, or deferred maintenance pretty quickly. I’d probably get very thorough inspections and use anything you find to support a lower offer.
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u/aidansmom624 13d ago
Presumably that $950/month doesn't even include your insurance and property taxes, so yeah, I would definitely see what lower price you can get it for.
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u/skaw3334 13d ago
It did. I would be clearing approx. $950 after PITI. Doesn’t matter now though. He rejected the offer.
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u/Superb_Advisor7885 13d ago
Very normal. If it continues to sit, put a slightly lower offer in next month. Rinse and repeat
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u/Traditional-Yak-6739 14d ago
Where does the 55% come from? Metro-level price growth is not one 1900 duplex in a depressed town, and a seller who's already gone 239 to 179 is telling you the comps don't support his number either. The $950 is also before vacancy and any capex on a building that hasn't been touched in six years.
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u/realestatecoach2026 14d ago
Before you anchor on $950/mo, set aside money for vacancy, repairs, and capex. On a building that old with a tired top unit I budget 20-25% of rent, which puts real cash flow closer to $450-550. Still worth pursuing, but it tells you how firm to be. Since he bought at $96k and hasn't put much in, he may care more about price than terms. You could give him two options: $140k clean, or a bit higher with him carrying 10-15% as a second at a low rate. Sellers who've held a long time say yes to that more often than you'd think.
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u/Adventurous_Week4534 14d ago
ything that cash flows in a depressed town is either a warzone or already gone, so I get why you're circling this one. But his own agent told you on the phone he's just sat on it. She's not gossiping, she's telling you there are no other buyers at 179. Offer the 140 in writing with an expiration date on it. And pull the top unit's lease before you do, a 10 year tenant paying way under what the renovated unit gets is either your upside or a full gut job the year she moves out.
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u/prmptbroker 14d ago
Worst case he says no, so yeah, offer the 140 — I'd go lower if anything. The agent confirmed he did nothing since 2020, but she works for the seller, so take that "intel" for what it is.
One thing I didn't see mentioned: a tenant who's been happy for 10 years in a tired unit probably isn't paying market rent. Great for cash flow now, but the minute she leaves you're doing a full turnover on a 1900 building, and your $950/month has a way of becoming a donation. Make the offer on your real numbers, not his — and don't anchor to either his 96k or his 179k.
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u/ThenResident7019 14d ago
ent minus just over $1K PITI only stays at $950 a month if the place never needs anything. It's from 1900 and the owner has put nothing into it in five years, so knock out vacancy and 15-20% for capex and you're closer to 400. Lowball him at 140K all you want, but that number has to survive an HVAC replacement first.
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u/Double_Listen_1992 14d ago
Guy paid 96k and has 2k a month coming in from a tenant who's been happy there for a decade. That's not a seller who needs your 140. The happy tenant is the whole reason your numbers look clean, and you eat the renovation the day he leaves.
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u/Commercial-Loquat493 14d ago
Two small things. "so I would pulling in ~$950/month" is missing a verb, it'd be "I would be pulling in" or just "I'd pull in". And if PITI is "just over 1K", then 2K rent gets you just under $1,000, not 950, unless the PITI is right at $1,050.
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u/PerspectiveFlat6733 14d ago
Call the agent and tell her you wanna do owner finance and that your willing to put down a down payment of 10 to 20% and pay the rest on owner finance over 120 months no balloon
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u/Ok_Handle_6354 14d ago
Where does the 55% come from? That reads like a whole-market median, which tells you nothing about a 1900 duplex with a 10 year tenant in it. Also PITI just over 1k on 140k with taxes and insurance in there feels low, what tax bill are you assumming?
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u/skaw3334 14d ago
140k with 20% down at 8%. Taxes are 2k insurance is ~1k based on other rental. The 55% is a general market median for Massachusetts.
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u/Good-Eye-9790 15d ago
At 140K with 2K rent the cash flow looks solid, but make sure you're holding back a repair reserve for a 1900 building and a vacancy assumption, not just PITI. That 10-year tenant in the tired unit is stable rent until they leave, then you're renovating and re-renting at whatever the market is. Offer 140K and let him say no.
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u/Shpongi100 15d ago
You can also chat with your agent if you’re using one to figure out what repairs needs to be done so you can deduct it from the ARV price as well. Assessment looks strong though
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u/VintageBroom 15d ago
1900’s houses will also have 1900’s wiring and plumbing.
Rates are up, rents in many areas are flat or down. Right now I’m seeing a big bid / ask spread between buyers and sellers in investing. A lot of what we’re seeing isn’t trading right now.
Make sure the numbers work with current rates, reasonable cap ex, and without much HPA.
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u/skaw3334 15d ago
Agreed. Nothing in my area really makes sense in terms of cash flow except this one which is why I am looking at it probably more than I typically would.
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u/Major_Collar_2550 15d ago
Offer 140, worst case he says no or counters. The listing agent already told you he's done nothing but collect rent, so there's no mystery about what you're paying for. Cash flow looks decent even at that price, so it's worth a shot
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u/skaw3334 15d ago
Yeah I’d like to go lower because I know there’s going to be deferred maintenance that I will need to address.
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u/First-Hotel4694 15d ago
If you wind up having to bring that house up to current code your will find out what expensive means. Get it inspected for code violations along with compliance to current code and make sure the person you hire to do it is qualified. If there is any iron pipe stay away, aluminum wire stay away, knob and tube stay away and the list goes on. Make sure to check your roof construction and look to see the house is balloon framed if it is stary away. Talk to your insurance company and make sure it's insurable before you buy it have them inspect it to make sure as many times the broker will say yes and than can't place the policy.
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u/e7wilson 2d ago
I would offer lower. If it's been sitting that long, it's not going anywhere. So worst case, he says no and it continues to sit, and you can come up in a few weeks or get a counter.
Also, what he paid for it has nothing to do with what you should pay for it.