possible first purchase

[Joe S.]

Hi all,

I'm thinking about making my first offer.  This would be my first ever purchase.  Thanks to these forums, I have found several investors in the same area who are more than willing to talk real estate and lend me advice.  I am very grateful for that.  I wanted to get some more opinions on this before I pull the trigger.  The property is a duplex that is located in a blue collar neighborhood close to Philadelphia.  Condition is good.  The area has not shown much, if any appreciation in the past, however it is a stable rental area.  Here is a breakdown of some numbers.  I would be house hacking by living in one side, but the numbers I ran are as if I do not live there  and have hired a property management company (even though I plan on being the landlord).  

Price: 95,000

Down payment: $3,325 (3.5% fha loan)

P&I: 429/m

Taxes: 300/m

Ins: 85/m

Rental Income $1800

Unit 1 (2bed) $900

Unit 2 (2bed) $900

Other monthly expenses: pmi ($69), vac($180), trash/sewer ($60), Ins ($85), repair($180) mgmt($180)

So according to my calculations this property would cash flow $321.44/m with a management company in place.  Total investment including $down and closing would be around $7500.  

My thoughts are that this is a good opportunity for my first purchase.  It's not going to make me rich but would serve as a good start to my investing career.  

Any and all opinions, comments, suggestions are welcome.  Thanks.

[Patrick Liska]

Couple numbers i did not see in there is Maintenance - (lawn care and snow removal), even with a PM you will be charged extra for that. i know you will be living there and probably doing that as well, but someday you may not, as you grow. always figure in those costs, so i would figure at least $100/m for that. And also CAPEX, allowing for major repairs, another $100/m. how about the Sewer and Water ? do you include that or is each unit have a separate water meter ? that also seems low for insurance, make sure you have a commercial policy. But your math was a little off, with your expenses( and you had insurance twice), you would cash flow $317, minus what i said if you have not included that. but don't forget, you are allowing for vacancy, maintenance, capex ( numbers you may have to use or may not ( about $400 ), so you will cash flow, just be sure to put money aside just in case you have an emergency.