So I’ve been looking at a small duplex that’s been on the market a while, and the seller is motivated, but the property needs a new roof and some foundation work. I keep running the numbers and I can’t tell if the potential cash flow after the rehab is just wishful thinking on my part, or if I’m actually missing something obvious that more experienced folks would spot right away.
I've seen deals like this where the rehab budget blows the numbers. If the roof and foundation are real risks, get firm bids and add a healthy contingency. Naturally, run rents with local comps, and stress test the cash flow with vacancy and financing.
Motivated sellers can be a trap. If they know the roof is bad they might price it to move. I’d want a contractor's estimate and a plan before I believe the cash flow.
Honestly, this feels like a sketchy puzzle. A roof and a foundation can erase a lot of upside fast.
I bought into something similar once; rehab costs spiraled and the timing killed the deal. It wasn’t the dream on paper.
Make sure you factor insurance after the work and any lender requirements. If the foundation work is substantial, the lender might push for more reserves.
If rents in that neighborhood look solid and you can lock in decent financing, there could be a path, but without solid bids it’s all guesswork.