I'm fairly new to this and have decided to buy my 2nd rental property a Duplex for $70k in upstate SC.
I am paying cash that i made on a prior flip, income is around $1150 per month, the property needs about $10-12k in repairs, taxes are around $2k per year, management fees @ 10%
Its a brick duplex 3/1.5 on one side and 2/1 on the other in a class B area..
Does this sound like a worthy deal??
Please help reassure me. Cheers!
There's a few numbers that are missing that really need to be considered if you want to know if it's a solid deal.
For simplicity, I would suggest using the BP deal analysis tool unless you have something else built to help you understand what numbers you NEED to look at before you KNOW you have a good deal.
I will say that initially the numbers that you provided do have potential, but without the rest of the picture It's hard to say. I would encourage you to track down the information and look at the numbers for yourself. If you need help, ask!
Here are just a few of the other variables I consider when I look at a deal:
-Loan considerations (i.e. length, rate, and downpayment) - to figure your cost of money variable
-Will you get a secondary (hard money or otherwise) for repairs....at what rate? etc...etc...
Personally, my baseline comparison comes down to my cash on cash returns (or how much cash I make divided by how much cash I put down). It helps me compare apples to apples given my personal operating assumptions.
In my opinion, CAP rates and NOI are a great way to compare properties to each other you're when doing business with other investors, but Cash on Cash is a great way to see how one property will perform for your personal operating assumptions, compared to the next.
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