Is this a good deal? (New york)

6 Replies

My partner and I are new to the real estate game and just put an offer in on a duplex and wanted to know what some of you more experienced investors thought or if we were missing anything.

This will be a student rental.

99,000$ agreed upon price

(comps in area in the 120-140k range)

2,000$ in repairs

estimated closing costs 5,000$

25% down 24,750$

interest rate 30 year fixed at 3.5%

taxes 5,417$

insurance 700$ yearly

Property management 20% (in our area they charge 10% but we put another 10% to factor in repair costs, vacancys or an "emergency fund"

 Utilities 400$/month

4 units at 550$/month or 3,300$ per semester

2,200 total gross from rent/month

total monthly expenses(mortgage,insurance,& utilities) 1,776$ 

net operating income 5,078

 cash flow 423.20$/month

ROI = 16%

Thoughts? are we missing anything? Thanks!

Correction* Interest rate is a 30 year fixed at 4.5%

You mention "per semester". Will this be a college rental? Only ask because that might increase your yearly maintenance a touch. I ran it through the BP rental calc and get $435 cash flow with the numbers that you provided except did 8% Vacancy, 2% repairs, 4% cap ex and 10% prop mgmt. All in all it doesn't seem like a horrible deal but I am sure others with a little more experience will chime in as well. 

One flag is your $2000 repairs. What repairs are you looking to do with that $2000? It just seems low unless the place is just about rent ready and spotless.

Is $550 going rate or is that what was told? Also is it occupied currently and for the next school year

Matt,  thanks for the reply.

yes i will be renting to college students and your right, i will probably have to throw a little more towards maintenance. The 2000 is a little low but the property is pretty much rent ready but will need some paint and more finishing touches. Thanks for the input!

Anthony, are you going to be charging rent by room or by apartment? You also said you were purchasing a Duplex but in your numbers have it listed as a four unit. I am assuming that you are charging by room and if so, you might be able to get away with more depending on what the local colleges charge for room and board as well as what your competition is charging.

also, you might be able to get a tad bit better interest too. 4.5 is not bad at all but was wondering If you shop around for this? 

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