How to price right a duplex

[Manuel Naranjo]

Hello everyone,

 It may sound silly but I'm having a hard time determine the right price to offer for a duplex especially if one the properties is occupied by the owner. Some books said just valuate based on "comps" like any other single family home. Others are more into cap rate like any big multifamily or commercial, but if I do this and come with the final offer price based on just the side rented income, the difference between asking price and offer is astronomical. At this point and don't know what is the best approach, so if somebody can help me with this will be really appreciated.

[Kenneth Mooney]

So, you're all in at 358k which is roughly a 5% discount from asking. Is this a normal amount below asking for a duplex in this area or can you get a larger discount?

All of your numbers seem pretty solid to me except the expenses. Typically what I do is 10% management, 10% maintenance, and 5% vacancy right off the top of the revenue. If you stick to this that means your total for those three is roughly 9600. So your taxes and insurance are less than 2k combined? Doesn't sound right for the type of home value/ type of home we are talking about...

Finally I wouldn't ever break your cash flow standard if you are a buy and hold investor for the purpose of increasing cash flow.

Figure out your true expenses, not what the home owner told you his expenses were, and then start with your required cash flow and work backwards to your answer.

I can tell you this as well, if you have the 90k to put down, you can go elsewhere and get much higher returns on houses that you would be able to buy in full.