I am looking to get into investing in a Duplex for my first investment property. I know that a duplex is more likely to have more frequent turnovers, and the subsequent leasing fee of 1 months rent (I have decided to use a PM that charges these fees), and the associated repair fees before a new tenant moves in. How should I account for these in my deal analysis?
I am currently using a 8% vacancy rate (my market has a overall 5% vacancy rate), and a 5% repairs and maintenance rate (I have been using 5% to analyze SFH homes, should this 5% be higher since its a duplex?)
Splitting hairs here I know but I usually factor one month vacancy per year as 8.4% = 30.66 days. When considering vacancy consider the following: In the event of a vacancy, do you just need to cover your expenses (mortgage, insurance, taxes, etc) or do you also want to be able to cover the income (cash flow) you would earn. In other words, do you need to set aside money to cover the total rent or just what you would be out of pocket in the event of a vacancy.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing