A property a few doors down from us is selling at an asking price of $100,000. There's two houses on the property, which has a total of three 2 bedroom units. Each unit was rented out recently at $700 a month. I don't know what was included in the rent.
Assuming we'd purchase the property at asking price, we don't have enough cash available for 20% down payment. We can, however, use the cash we do have and borrow against our house to avoid PMI. Still, using the 50% rule and assuming 100% financing, it looks like we'd see about a 6-7% return.
HOWEVER, since there are two separate buildings on the same property, I'm wondering if the 50% rule would need adjustment, since repair and maintenance expenses could very well be higher than what the 50% rule assumes.
Also, the homes were built in 1908 and 1914, respectively. Eyeballing it from a sidewalk walk by, the homes both seem to be in decent shape on the exterior. But having previously owned and renovated 2 homes that were over 100 years old, I'm aware that there'll likely be "surprise" expenses.
Any ideas on how I might get more accurate in estimates for ROI? It's the 2 houses on one property thing that's throwing me off.