Help me analyze this deal
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I am looking at purchasing my first rental property. Let me know your thoughts on this one. Its an older property so the pricing makes me nervous.
@Ricki Joe Abney how did you arrive at your variable costs. Did you do a repair budget and capex budget. 4% vacancy is the equivalent of your tenant staying an average of 25 months. 4/100=1/25. Most underwriters of the loan will use 5%. How many units is this. No PM costs. Taxes seem low for 445k property. Why do you pay for water and garbage?
@Tim Herman
@Tim Herman it's a duplex. Really just tinkering around with the numbers trying to get a feel for it. I set the taxes lower because the asking price is way over the value based on HCAD. I wanted to post it with some flaws to see what kind of feedback I would get and others point of view
@Ricki Joe Abney Just saying it is a duplex doesn't provide any information. Size matters. One item in a capex budget is floors. So you are looking at one with 1000 sf of flooring per unit and 1 with 2000 sf of flooring. My area it is $6 sf to replace. Go to your favorite flooring store and ask for the commercial warranty. Most will be 10 years or less. That is your lifespan. Smaller duplex 2000 sf*$6 sf=$12000/120 months lifespan=$100 per month for 1 item in a capex budget. Larger duplex 4000 sf*$6 sf=$24000/120 months= $200 per month. Have to save for hvac, appliances, roof, hot water heaters, etc.
@Tim Herman thanks for the info. Much appreciated