reasonable deal?

4 Replies

I am looking for a little guidance. I am looking at a duplex that is currently rented out.  $900 per side. Built in 2006 in an up and coming area. The owner is asking $210,000. If I could get in around $200,000 I can expect around 1200.00 per month in operating costs. Leaving $350 per door. Sound like too much? I own two single family homes right now but am in the market for a duplex.  What do you think?  Thanks! 

@Daniel Dawson  I'd pass on it. If you secure the property for 200k and pull in $900 per side their isn't enough cash flow. I know its a new building but after you factor in taxes, insurance, management, repairs, accounting/legal, electric  gas, water, trash services the cash flow isn't enough to make it worth it. 

I can tell you from experience,  its best to overcompensate for these things. Its always nice to make more money then expected then the other way around. 

I would run the buy and hold calculator and you will see, 

 http://www.biggerpockets.com/buy-and-hold-calculat...

@Rob Landry Thanks Rob, I appreciate the advice. Maybe I will try to get a couple more single families under my belt first. At what point would something like this sound interesting? Gas, water, electric and trash are paid through the tenants. I will also be managing this property myself. 

@Daniel Dawson  I ran it through my spreadsheet quick and it does not seem like a good deal to me. Are you buying all cash? or getting a Mortgage? I can email you the spreadsheet if you want I can't figure out how to attach it.

@Daniel Dawson That's a good question. Everyone has their own investment criteria but to give you an idea I started out with metrics of $100 dollars a door from cash flow before taxes and a ROI without appreciation of 16% or higher. I've upped that in 2014 to $150 per door and 20% ROI. I'm planning for 2015 now but I will probably increase that again, it gives me motivation to continuously try to find ways to improve the profitability of our investments.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.