Duplex analysis in nj

6 Replies

Ok gang Here is a duplex deal I am analyzing . Hoping I can get some insight from you all. The main thing that caught my interest is the seller financing with sub-2 terms.

Purchase price 65k
Rehab cost 65 k
ARV 190k
Monthly rent 2100
Taxes 5500 annually

The deal is that I will take over the previous owners payment @700 monthly. Typical sub-2. From there I would rehab and try to get it rented out at 1050 per unit per month. My goal is to cash out refi at 70% ltv @ 133k

Thoughts?

Are rental income assumptions true? 65k rehab is that a "good/hard" number or guesstimate? Know Woodstown a little and I am just curious if ARV is correct?

Rental estimates are good and the rehab cost is a solid 'budgetary ' number
This property is not in woodstown but a similar town with a great school system

@Jon Lafferty

It is probably worth the $300 to get an ARV appraisal done before starting this process. You are going to be seriously unhappy if the bank comes back at $145k or so once your renovations are complete.

Do you have a fair number of sold duplex comps to support $190k ARV?

If your numbers work out, this plan is brilliant.

You should walk out with a few thousand in your pocket plus a nice rental producing about ~$200/month. I'd only cash out $127k, because I like to see my rentals bringing $100/door/month.

How I see your $2100/month in income against the following expenses:

Mortgage Rate 5.00% (you'll probably be able to do a bit better than this)

Length of Mortgage in years 30

Monthly Mortgage payment $681.76 (0% down on 127k loan)

Taxes $458.33

Sewer and Water $125.00

Trash $-

Heat/Utilities $-

HOA $-

Cap Ex and Ops $150.00

Insurance $100.00

Mgmt Fee $210.00

Vacancy $168.00

Total Expenses $1,893.10

Total Revenue $2,100.00

Cashflow/month $206.90

Cash on Cash Return 45.14% (this is inflated because the only thing you're going to put "down" is your refi costs which I estimate about $5500)

@Account Closed and @Aaron Montague thanks for your comments. I think you are both onto the same thing, the ARV may be somewhat unknown. I know someone who lives on the street in a similar duplex so I am feeling more confident on the rental comps. I am struggling to find a good ARV comp in the area for a mult family / duplex. The last sale was this duplex in 2008 for 120k. Makes this a little riskier to say the least. Aaron you are right that it will be a major disappointment if I cant get a nice chunk of cash out of this house after the rehab. That would shut any future investing down for a bit while I save up another chunk of cash.

Taxes seem very low about 10000 low

@Jon Lafferty

How much money does it cost to assume a mortgage?

I'll reiterate my "get an ARV appraisal" done comment.

Here is how I see your finance options:

65k out of pocket for the renovations
2k to close (guess)
4200 in Mortgage over the renovation
2750 in Taxes over the renovation

~74k out of pocket BEFORE rent checks start coming in

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