Hoping to get some feedback on this property that just came up for sale in my local market.
The numbers -
Asking price is $300,000 but I would offer and pay no more than $285,000.
Taxes would be $5,500 per year
Rents for each would be conservatively $1,300 per month and probably closer to $1,500 per month.
If financed with a standard loan @ 4.5% i see PMTI at $1,700 and with a HELOC for the 25% down that payment would run $500 per month. So all in my costs would be about $2,200 per month and rents would be between $2,600 and $3,000. The duplex was recently remodeled so up front cap ex would be minimal.
Cash flow would be $400-$800 per month before vacancies and cap ex.
Seems like an OK but not great deal, but curious on thoughts.
The numbers look good, but you may want to look at a few more numbers before moving forward on this one. Every property has expenses correlated with it. You also have the vacancy factor. I can usually rent my home within 3 weeks. I like to interview all my tenants so we are on the same page for expectations. These are some of the expenses to consider before your renter moves in:
Home Warranty
Paint
Miscellaneous Repair (this is important because if something is faulty they will look to you for compensation)
$2200 in expenses for the home.
$3000 in rent x 80%=$2400. (20% is a number I use to account for vacancy and upkeep)
The way I do the math, if the home needed nothing, I see a potential $200 in profit monthly. For that much home I personally like a little more spread in my profits. But you have to decide whether the return is worth the risk. Ultimately it is your decision.
At this property I’d be inheriting one tenant and have vacant in the other. Pros and cons I suppose. I like that someone would already be in place but makes it harder to asses needed repairs and I don’t like that I couldn’t put them through my screening process