Rookie looking for feedback in Duluth, MN

[Robert Coldwater]

I’m a rookie real estate investor. Investment is in Duluth, Minnesota, but there was not an option for that above

I have one single-family home for which I paid cash. Currently rented to top quality tenants. Cash flow $970 a month. $240,000 worth of equity.

My wife has a duplex with over $500,000 worth of equity in the small town of Grand Marais.

we are both looking at extracting equity from these properties and purchasing  duplex townhomes adjacent to each other. 12 bedrooms four bathrooms total. Current total rental income is $6224 a month. The units are in a good location and in very good shape, but could use some value added work but are in not in need of anything. They are currently renting slightly under the market value.


if we use a home equity line of credit at 6.25% with the first five years interest only payment and have an inflated estimate of $$4340 a month in expenses (which includes 1200 a month for maintenance 600 a month for management fee, 250 for miscellaneous such as rental license and a maintenance plan with the local utilities, etc., and an interest only loan payment of $3290).

this produces a monthly cash flow of $1784.

property values over the last 50 years have averaged just over 3% year to year increase.

I am considering purchasing this property, and selling it in 4 1/2 years prior to the expiration of the five-year interest only payments.

Over the 4 1/2 years we would collect $96,336 in cash flow, and estimate an increase in equity of $70,000, for a net gain of $166,000.

with the repayment of the capital, we would restore the full equity value to both of our properties and pocket $166,000 that we gained and do it again.

i’m wondering if folks would be willing to go through my analysis with me to help me consider anything that I’ve missed.

Thank you for help with my first post to the forum.

kind regards,

Robert