An interesting opportunity to purchase a duplex has come up. D stumbled upon it yesterday and took steps to find out more. He has this spreadsheet that calculates cash flow on rental properties and when he comes across one, goes through the exercise to see if it will work. Most don't until now.
The back story is that the seller owns a half dozen homes and because of a recent job loss and incoming baby, is selling a few of them to get some cash in the bank. There has been offers tabled but they have not been completed due to financing.
After speaking with my banker, D found out that even though the new mortgage changes aren't supposed to come into effect until April, it has already changed at our bank. They are asking for 20% down on rental properties and it cannot come from an unsecured source.
I have less of a mental block with the idea of owning a duplex vs. renting out the cottage as I am not living there. There is a high possibility we'll be making an appointment to see it.
What we know -- the tenants both are new as of last fall, so they haven't been there a long time. From the pictures, the house has been completely renovated with the wiring, electrical upgrades and plumbing upgrades done.
The kitchen and styling are all modern. It looks like something I would be willing to rent. That is important to me. I wouldn't want to be slum lord. And it is cash flow positive. We know what the tenants do for a living and that they wish to stay.
On paper would mean more another asset and debt even though it is supposed to "run itself". I have no experience with this -- D does though. Do we want another property? Or the potential work? Is this particular city a good one to invest in?
We would have to fund the whole show should there be total vacancy and how do we feel about that? It really means, how do I feel about that as I would be the one funding it. Could I do that and continue our current plans at the same time? I know I am not willing to work more for this.
If we are able to answer these questions, we'll know pretty well if this avenue is one we will continue to pursue or not. Plus we'll learn some new stuff which is never a bad thing.