I am looking at a Duplex in my local area (New Albany, IN).
The asking price is $189,500.
Without doing much research, the ad says 1425 total rent to be expected between both units.
By my calculation that's only about a 5.5% Cap rate assuming 60% NOI.
This seems pretty bad, I seem to recall hearing that you should generally shoot for around 10% cap rate.
Cap rates don't always work when analyzing deals. A 10 cap rate is what a lot of people shoot for, but it's not always easy to find in all markets. I would look at what the actual cash flow is going to be.
That's a much easier way to determine if it's going to help you to meet your goals or not. As a new investor, It's a lot easier to analyze if a deal will work by looking at how much you will bring in each month after expenses.
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