I wanted to share my recent deal with everyone to critique. I'm under contract on a duplex in central IL. Both units are 2 bed 1 bath at 860sqft that includes a garage space each. Rents are $745 and $695. We own an identical duplex literally across the street in the same condition that brings in $800 per side so there's room for improvement. I'm using my HELOC for the down payment, I'm well aware of the risk and it doesn't bother me. I have a flip going currently (Also purchased and rehabbed using the HELOC) that should be real close to clearing the HELOC off after it sells.

Purchase price $118,000

Down payment $18,000

Appraised value $135,000-$145,000

Mortgage payment $645

Heloc payment $180

Insurance $71

Taxes $300

Total $1,196

Gross rents $1,440

Basic Cash flow $244

My cash flow number does not include capex, vacancy or management. It has a newer roof and hvac so there shouldn’t be a big capex item the next year before I refinance to get the cash flow up. As for vacancy in banking on the current tenants staying at least a couple years. One has loved there 20 years the other 6 years. The last piece is management, I do my own management and take no money. This is my sweat equity.

I’m using a 5 year balloon commercial loan on a 20 year amortization for the time being until I finish the flip, then I plan to get a 30 year fixed at that that point to up the cash flow. I’ll also be raising rents slowly, there’s a 20 year tenant in one side and a 6 year in the other.

I will not be taking any money from the cash flow, banking it up for a capex fund and reinvestment. Once I refinance, it will add $180 cash flow from mortgage length and rate change and another $180 when the heloc is paid off.

Let me know what you think!