Help analyzing our first deal - Duplex outside of Portland OR

[Daniel Jodrey]

Hello BP,

Currently looking at a Duplex and curious thoughts/opinions and any advice or notes that I am not thinking of. Have been looking for a long time for our first deal and trying not to have analysis paralysis and at same time being cautious and not getting into a bad situation.

The property was built in the 70's. One side has not been updated much since the 70's and the other side has been updated somewhat. Our plan would be to complete the most updated side first and rent out quickly (estimate about $5k-$7k to get it fully rental ready). We would plan to House Hack and live in flip the other side that is all outdated. It is in a great area that has grown a lot through recent years and is walking distance to shopping/restaurants etc. there is a large fenced backyard as well as 1 car garage on each side.

We spoke with realtor today and believes we have a competitive offer with price that is close to offer as well as a 6% sellers credit. We would plan to use the credit for rate buy down and getting us a interest rate 6%, as things stand today. The owner is a single man that is old age and needed to move into a retirement home. He is motivated to sell and let his agent know he would entertain the seller credit.

I ran the numbers on the calculators and got the below. This is of course dependent on if we can rent for the proposed amounts and there are not major issues with the property that would require more money. Overall it seems to be in good shape and no glaring damage/issues.

Details:
- 3 Bed & 1 1/2 bath on each side 

-1,200 square feet for each side.

-Asking Price: $600k     Offer Price: $585k with 6% seller credit.

-Potential Rents: $2,000-$2,300 (Most 3 Bed 1 1/2 Bath rentals within 5 mile radius we found on Rentometer are $2,100)

         -Monthly Income Estimate: $4,200

-Total Expenses (Incl. 15% for Maintenance/ Vacancy/Cap Ex) : $3,876

-Monthly Cash Flow: $323 

-CoC ROI: 3.31

-5 Year Annualized Return: 10.52%

-NOI $37,548

-Pro Forma Cap: 6.42%

Please let me know overall thoughts and things I'm missing. Overall we are trying to find anything that would break even or cash flow. Plan is to long term rent and hold for a longgg time. Wanting to acquire 5-6 long term hold properties to build out our portfolio and be financially free in 12 years or so. Thank you!