Would love input/opinion on this potential property. Strictly looking at #'s...
Location: Sulphur Springs (low crime area of Sulphur Springs)
Purchase Price: 170k
Rental Income: 1850
Type: Duplex (2 bed 1 bath & 2 bed 1 bath)
Condition: Turn-Key property. A+ condition. Tenants currently in place and want to stay.
My CAP rate calculation is ~5%... Thoughts?
@Elisa D. I don’t know anything on the market but the numbers look good. I like to start with the 1% rule as a simple way to look at a deal. This meets that criteria. (And yes, BPers, I’m well aware of the fact that the 1% rule has limitations, but I like to start there)
If this truly is turnkey in a good area that meets the 1% rule I would say go for it.
Are you financing or cash purchase if you are looking at cap rate? What expenses is is the owner responsible for? Resident leases I would also ask to verify.
@Elisa D. cap rate isn’t a factor for a single duplex. What’s the market bear for that?
If you are financing the property what is the cash on cash return? Have you had it inspected yet? The two numbers point towards something worth continuing to look at. But you didn't provide enough to give a actual opinion. There a HOA monthly fee?
I'm not sure I would say most duplexes in that area are property a+ to me that would qualify as a new build but just open to individual opinion. At the end of the day it depends on if the return % works for you. I would take a hard look at the property management (which we can assist with) which can make or break a deal especially in this type of area. Also you want to verify what landlord is paying for in the lease. Is the property using wall units (higher bills for tenants)? Is the water on one meter? Can you bill tenants back? Is there a washer/dryer hookup? All of these play into future potential rent and how attractive it is for renters.