How is this for first deal?

[Hau N.]

Hello everyone,

I'm thinking of purchasing my first property ever (other than my primary residence), but not sure if it's a good deal.  This is a 1984 duplex, 5/4, located in a class B neighborhood within walking distance to shopping plazas.  I was hoping to obtain some inputs on this deal to make sure I'm not missing anything.  There is a similar unit that is currently pending.  The asking price for that was $255,000.  Thank you in advance.

Purchase/Finance

Asking price: $259,000

Down 20% = $51,800

Interest 4.5%

30-year loan term

Closing cost of 3% = $7,770

Total cash needed = $59,570

Operation

Gross rent / month = $1,900

Operating income = $1,620

Operating expenses = $625 (36.8% of income: 10% vacancy, 10% maintenance, 10% cap ex, property management %10, insurance $50, property taxes $243, gardening $50)

NOI = $1,024

Loan payment  = $1,050

Cash Flow = $35/month

Cap Rate = 5%

ROI (year 1) = -7.1%

ROI (year 2) = 12.9%

ROI (year 5) = 79.8%

-HN

[Account Closed]

Am I reading correctly that you are willing to invest 60k in order to cash flow $420 a year? Please tell me that I am readin this incorrectly. A bank CD has a better return with FDIC insurance. Maybe the 420 explains it.