Saint Paul, MN Duplex analysis

[Nathan Christensen]

Hi everyone,

My girlfriend and I are planning to move to the Saint Paul, MN area in about a year and we, like many others, are hoping to house hack a duplex. However I want to analyze properties as if I was buying them as a purely passive income property. After a few hours of scouring the forums and reading the county websites I came up with these numbers. I was hoping I could get some local input on how close I am to accurate numbers.

I went with a conservative $100 cashflow per door, mostly because my down payment will likely be less than 20% so I will have mortgage insurance. For rent I just poked around Zillow and other rental sites and looked specifically at small multifamily for comps. Maintenance, Cap Ex, Property Management and Vacancy loss I really just scoured the forums for what everyone else said they used in the region and this is sort of the conservative average I came up with for each. I did the same thing for water/Sewer. For Garbage I went to the Saint Paul city website and saw that fee was 102.44 per quarter per unit plus a 24.60 annual fee. That broke down to 70 per month. Honestly for snow and lawn care I kinda just read some forums and made my best guess. For the rental license fee I took the total cost of the Tier 2 rental licensee fee for a duplex ($305) and divided it by the term (60 months). This came out to 5.08 a month but I made it 10 for possible violations/fines. For mortgage, insurance, and property taxes I have simply been looking at what Zillow and Redfin estimate. I trust their mortgage numbers are pretty close (when adjusted) and I can double check the tax number through the county website but I am skeptical of the insurance numbers. Please tell me if Zillow and Redfin are way off on this.

I'm sure I have a long way to go and missed some things so any and all input is great!

St Paul, MN Duplexes

Rent:

• 3/2: $1300-1600?
• 3/1: $1200-1400
• 2/1: $900-1150
• 1/1: $750-900
• 0/1: $550-700?

Expenses:

• Maintenance - 9%
• Cap Ex - 9%
• Vacancy loss - 6%
• Property Management - 8%
• Water & sewer - 80/month
• Garbage - 70/month
• Snow Removal & yard Service - 60/month
• Rental License fees/fine - 15/month
• Insurance - PITI
• Property taxes -PITI
• Mortgage -PITI
• Profit - 200 minimum

My tentative equation:

(Rent x .68) - 425 > PITI = Deal

[Bruce Runn]

A combination of 9% for maintenance and 9% for cap ex seems extreme. I hate using %'s as the repair costs since my bigger triplexes actual costs don't vary that much compared to my standard duplexes and the numbers are based on rent/not value/how many items have already been replaced. I've been averaging about $300/month across 10 years for maintenance and cap ex so that's 9% in total but I renovate every property I buy as I keep them long term and knock out issues up front and include that in my acquisition price. My vacancy rate is under 1% across those 10 years and I self manage so no outside management costs. You might be building a cushion that will prevent you from buying something or covering everything known to mankind for contingencies. If you were competing with active investors like me on a duplex, I'd have 10% built in where you'd have a 33% loaded in so you're including an additional 23% expenses in your calculation. This is more of an FYI on how some investors aggressively go into purchases. I require a much higher ROI but thought it worthwhile to show you an alternative view.