If Ramsey and Kiyosaki had a child...would he buy this duplex?
I first came to BP about 3 months ago and have become an ADDICT. Forums, blogs, podcasts...I can't get enough! My wife calls BP my "other" wife.
I have three duplexes under contract that I'm very excited about. The first one just got inspected and I'm waiting on an appraisal. I was hoping to get some perspective from the more seasoned guys on my deal. I'm buying in an LLC since I have a partner. The property was remodeled down to the studs 9 years ago. Inspector said it's one of the nicest duplexes that he's inspected in the last several years. A couple little things that we'll need to fix, but nothing that we're even going to ask for from the sellers.
I'm 35, with a solid income stream, so I'm using 15-year amortizations on all the properties. I can keep adding in my own cash flow to continue buying, and I want the properties to be paid off when I'm 50-55.
Here's the nuts and bolts:
Purchase Price -- $144K (Sellers paying closing)
10% Down Payment -- $14.5K (4.5% 5-year fixed, 15-year amortization)
Rent -- $1650/mo. (both units currently rented by very nice people who live very close to work and really like the place)
Mortgage -- ($991/mo.)
5% Vacancy -- ($80/mo.)
Actual Property Taxes -- ($240/mo.)
Actual Landlord Insurance -- ($60/mo.)
4% Property Management -- ($66/mo.) (Actual %, friend is a realtor/manager, gives me a great rate on properties I buy through him if they're in a good area)
10% Maintenance/Repairs -- ($165/mo.)
NOI -- $12.4K
Cash Flow -- ~$40/mo.
COC -- 3.5%
Cap Rate -- 8.6%
Total ROI (Including Principal Paydown) -- 45% in first year (goes up in subsequent years with additional principal pay down)
I think I did well for a first buy. Agree/disagree? Only thing I think I may not be adequately budgeting for is maintenance/repairs? Would love some feedback from some experienced investors! Thank you!