[Calc Review] Help me analyze this deal
Analyzing properties in my neighborhood and found this duplex.
It looks to be in good condition recently remodeled with month to month tenants occupying.
Let me know what you think.
*This link comes directly from our calculators, based on information input by the member who posted.
Looks good! Just make sure all sorts of expenses are accounted for. I would bump up some of the monthly expenses like gas, electricity, water, etc. Just to be safe.
@Michael K Olson unlikely you can find insurance for $24 per year. Have you run a capex and maintenance budget. If the duplex is small maybe the capex is right. If you have a 1000 sf per unit of flooring. My area it is $6 sf. 2000 sf*$6sf=$12000. Go to your favorite flooring store and ask what the commercial warranty is. Most will be 10 years or less. $12000/120 months lifespan=$100 per month for 1 item in a capex budget. Still have to account for roof, hvac, appliances, hot water heater, etc. I use $50 per unit as minimum for maintenance.
Quote from @Tim Herman:Hi Tim,
@Michael K Olson unlikely you can find insurance for $24 per year. Have you run a capex and maintenance budget. If the duplex is small maybe the capex is right. If you have a 1000 sf per unit of flooring. My area it is $6 sf. 2000 sf*$6sf=$12000. Go to your favorite flooring store and ask what the commercial warranty is. Most will be 10 years or less. $12000/120 months lifespan=$100 per month for 1 item in a capex budget. Still have to account for roof, hvac, appliances, hot water heater, etc. I use $50 per unit as minimum for maintenance.
Thanks for your input. Good catch on the insurance. Should be 26 a month.
I appreciate your advice on the capex budget information. For the analysis part I have been putting in 5% for capex. So I should go with a higher percentage? Maybe 10 to 15%. Is there a way to run a capex and maintenance budget to estimate what should be put away for capex. Appreciate your advice.
Mike
Quote from @Dalton King:
Looks good! Just make sure all sorts of expenses are accounted for. I would bump up some of the monthly expenses like gas, electricity, water, etc. Just to be safe.
Hi Dalton,
Thanks.
Have not put in the information for those figures as am making the assumption that the utilities are metered separately as there is currently no information. If the analysis looks good and there is enough wiggle room I would contact the real estate agent to get further information on the utility situation and update the analysis further with the info from the real estate agent. From there the decision would be to put an offer on the property or not.
Thanks,
Mike
@Michael K Olson There is a very good capex spreadsheet in the files section by @ sam tato. You can build your own. Each property will have its own number for capex. I showed you how to do floors. You find the life span for the other major categories. Roof 25 years. appliances 12 years hot water heater 10 years hvac 20 years. A 1000 sf house will have a different capex number than a 2500 sf house. a $5000 roof/25 year life span/12 months in a year=$17 per month. What happens when the roof is 15 years old. Your new effective life span is only 10 years. $5000/10 year life span/12 months in a year=$42 per month.
A maintenance budget is similar. Estimate the cost to do a turnover plus estimate the number of service calls during the same time period. With your 5% vacancy that is the equivalent of a turnover every 20 months. 5/100=1/20. Assume it costs you $1500 for a turnover plus 2 service calls at $150. $1800/20 months=$90 per unit. You can do a major turnover between 3 to 5 years and just touch up in between. Let's say for a touch up it costs you $500 and you do a major every 60 months. 2 touchups=$1000 plus major $1500 plus 5 service calls@ $150=$750. $3250/60 months=$54 per month per unit.