Hi guys,

A friend just came to me with this duplex property, he knows the landlord and just gave me the heads up, don't have to much info yet but if it makes sense want to move quickly.

Duplex in a decent area, not hard to find renters. Don't know the condition of the units yet, they're occupied. Lanlord pays water and tenants electric and gas. Not sure yet what type of AC/Furnace or electrical they have.

Details:

Price: 100K

Rent total for both units/month: $1,625

Taxes: 2,000

Insurance: $1000 (my estimate, don't know how much yet)

This is my first foray into multi-units, what else should I be asking? I'm in the process of another deal for a house that I plan to move into, if this property is a very good deal I can either convince family to buy with me or I might just drop the house I'm planning on buying and buy this one, an outside chance could be a partnership. It's a short-sale by the way, so could be an adventure, anything else that I could offer the seller as an alternative? Excuse my ignorance!

Thank you very much in advance!

why wouldn't you just mortgage the property in the traditional sense in your own name. Collect rent pay the monthly mortgage and keep the spread as income

Hi Asim,

Thanks for the response, well I don't qualify for a conventional, so doing a FHA on the other house I'm in the process of buying, so if I go ahead with the other house I can't do 2 FHA loans, I would have to drop the other house and go for this duplex but again it's a short sale so it's a risk. I'm willing to consider hard money loan if the numbers for this house make sense.

@Roy Gutierrez  This being a short sale, the actual purchase price may end up being higher if the bank hasn't already approved the asking price.

As for the numbers, the devil's in the details, and if you don't do your due diligence, then you may find yourself in a negative cash flow property. You'll need more info then just the taxes and insurance. I found the following article very helpful when analyzing an investment property.

http://www.biggerpockets.com/renewsblog/2013/01/19...

Also, do a search on "buying a rental property," there are a lot of excellent articles on the subject.

Thanks for the feedback @Randy Johnston  , very true, the bank can change up the numbers, per the seller the number is what it recently appraised for, what is the customary number that the bank uses for an acceptable amount? I would guess the appraisal would be a strong number to propose to the bank with a good chance of acceptance but I really don't know.

I downloaded the "Buy_and_Hold_Evaluator.xls" spreadsheet,  and this is my return if I :

Purchase Price: $98,000

Rehab Costs: $4,000 (supposedly everything is in working order and have renters in so I'll assume right now that I have to spend $5,000 to fix X)

Interest rate: 3.85% / 30 years

Mortgage  $99,888.37

Monthly Mortgage: $468.28

Rent monthly (2 units): $1,625

Taxes: $2,000

Estimated Insurance: $1,000

Better yet, 

I'm attaching the results of putting the numbers in the spreadsheet. I will be doing the management but still including this cost into the calculations.

Thanks.

Got some more information, taxes are much higher than what I thought but the rentals have passed the city inspection for rentals. The owner has a service for snow/grass but I really would like to put that responsibility on the renters, not sure if that's the way to go yet. Attached new numbers.

One more adjustments to the numbers, my apologies for being all over the place! The first image is the updated numbers with the excel spreadsheet and the other one is from the BP calculator (doesn't take into consideration taxes?), not sure what is BP "Cash on Cash ROI" which is very different from the "Cash on Cash Return" from the spreadsheet (I really need to put the time to become familiar with all the calculations!). If you guys can give me a quick opinion about the numbers, cash flow seems decent specially that it should be higher since I'm going to be doing the management and minor repairs. Thanks!

Any opinions? Seems a good deal to me, decent cash flow, the coc is 8.2% although I read here some people prefer 10%+, first time I'm doing these calculators so I want to make sure I'm not under/overestimating something. Thanks in advance!