Help analyze first deal-Duplex

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4 posts by 3 users

Mike S

Real Estate Investor from Latonia, Kentucky

Feb 23 '13, 12:58 PM

We're looking at a duplex of 2/1s that are rented currently for $450 with 6 months left and $480 month to month. Overall the building is in great shape, with the only major maintenance issue that I can see is that the roof looks at least half way through its life.

It's listed for $49,500 but has been on the market over a year likely due to comps. (Not many duplexes selling above 35K in the West Price Hill area of Cincinnati.) The max we'll pay is $35,000. Financing will be 30% down ($10,500), 6% for 15 years with a payment of 206.74

Expenses monthly are:
-Taxes $115.66 currently
-Insurance $52.25
-Maintenance (10% of rent) $93
-Utilities ($50 per quarter, per unit for water and sanitation) $33.33
-Management (10% of rent) $93
-Vacancy (10% of rent) $93

Once I take my expenses and debt service from my gross rent, I'm left with $243.01 cash flow for a 27.77% COCR. If I understand correctly, my NOI is $5397 for a CAP rate of 15%.

Looking forward, I should be able to reduce the taxes to about $800 with a revaluation and market rent for 2/1s is about $550. These units are nicer than most in a little nicer area and they have AC, so I think higher rents might be justified.

Let me know what you think.

Ben Leybovich Video

Real Estate Investor from Lima, Ohio

Feb 23 '13, 01:15 PM

Your numbers look fine Mike. How are you financing this and where in Cinci is this exactly - I lived in Cinci for 7 years. good luck

Medium_logo_03Ben Leybovich,
E-Mail: [email protected]
Telephone: 1.888.508.9643
Author: Cash Flow Freedom University & free: 20 Ways to Buy Investment Property With $2,000 or Less

Michael B.

from Apopka, Florida

Feb 23 '13, 05:51 PM
1 vote

The numbers look good. However for your first deal, are you up to managing a cheap duplex in Price Hill?

Cash flowing deals are easier to find in tough areas, but it takes a special type of landlord to profit in such areas. Tests can come when you least expect them.

But I seem to recall that East PH was worse than WPH. But I could be out of date since I left Northern KY several years ago.

Mike S

Real Estate Investor from Latonia, Kentucky

Feb 28 '13, 05:08 PM

I appreciate your feedback. I'm financing through a local portfolio lender. The building is actually in great shape and is in a nice part of West Price Hill. I also think I'm up to the challenge as I'm very familiar with low income folks through my job. East Price Hill is a worse, but it's hit and miss all over. I'll also be using a local property management company to handle the day to day stuff.

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