Is this a good deal? thoughts and feedback

3 Replies

Hello guys, I first want to thank BP for being an amazing community. It has answered nearly every question I had without me even having to ask it. With that said I am looking to purchase my first investment property and it is a duplex. I wanted a second opinion on the deal and if you guys thought it would be worth it. I am looking to purchase the property for $110,000. Rent would bring in $1,400 a month. Expenses would be as follows. Insurance -$40 Cap Ex - $70 Taxes - $150 Repairs - $70 Principal and Interest -$481 Vacancy - $70 This makes my monthly income on the property roughly $250 per door before taxes. The only thing that worries me is the cap rate (if I did the math right) is just 5.25%. I just wanted some second opinions on this deal and if there is anything I am not considering or should think about. thanks, Tyler

Income - Expense / Purchase Price

Income: $1400 x 12 = $16,800

Expense: $400 x 12 = $4800

$12,000 / $110k = 10.9%

You do not include debt service when dealing with the CAP rate. How is the location? Keep your down low & you should have a nice Cash on Cash return, assuming the property doesn’t have a lot of deferred maintenance that needs to be done now.

the area is a good one. I live near there now and the downtown area is stretching this direction. Maintenance is something I am looking into this week but other than that you are saying it looks good?

Have you checked what CAP rates are doing in your area?

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