Updated 3 months ago on . Most recent reply
[Calc Review] Help me analyze this deal
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Hello, looking to see if this duplex could be a deal. The way I structured the deal is 203k Loan, 4% down. House hack.
Purchase price $240,000
Rehab estimate %25,000
ARV $339,000
Monthly rents $1400 per unit, $2800 both units occupied.
Cashflow monthly after expenses $300.
Advice or corrections would be appreciated, thanks! Found property on zillow 207 williams cannon dr, austin texas
Most Popular Reply
@Marcos Cardenas Several thoughts come to mind.
Sale price is 240k but the mortgage amount is 230k. To clarify, not putting 20% down causes one to pay PMI. I didn't see that in your expense category. Yes I also understand it is a house hack, but both sides are occupied. I thought the leases ran through June 2026. You may have to move in a bit earlier to comply with owner occupied loan provisions.
Overall, this is an EXCELLENT opportunity if you are going from renting to owning and house hacking. It is a GOOD opportunity if you were not house hacking. The 1% rule is what I use for the initial evaluation on the property. However, you have to include purchase price plus rehab cost and evaluate that against your rental income. Meaning that 240k plus 25k rehab (more like 30-35k) makes your purchase price 265k. To meet 1% you need $2,650 monthly rent, you are receiving $2800. I think this will work for you. I wouldn't call it a home run but a solid single to double.
Someone said be mindful of LOCATION, LOCATION, LOCATION. I don't give a sheet about location or school districts when renting a duplex. That is because my tenants could care less about location and/or school districts. Tenants that rent a duplex are looking for something clean, safe/comfortable and CHEAP! Cheap being the most important ingredient.
Don't misunderstand what I am saying, don't buy in a war zone but duplex communities are normally blue collar, lots of cars, and a rental neighborhood as compared to SHF housing, a mix of white/blue collar, fewer cars, and owner occupied properties who take pride in housing appearance and lawn care.
What YOU are interested in is NUMBERS that make the property profitable. Most of my duplexes are 2 bedrooms. Therefore I usually don't have families with children. If I do they are very young and don't attend school. I usually have a couple living together or a single tenant. So they are not concerned with schools and they usually are living paycheck to paycheck so affordability is highest priority. So if you can make your duplex the best on the block and keep rents very reasonable your occupancy will be good. I usually show my property one time before I get a signed contract. That is because of two things: I verbally screen prospects before I take the time to show my property and 2. My properties appearance is top notch when compared to the competition. Nice appliances, ceiling fans in living room and each bedroom, granite counter tops in kitchen and bathrooms, and tile or luxury vinyl flooring with new tall baseboards. Wall are painted with contrast not the same as the baseboards or ceiling. Microwave over stove. You want to show the property by opening the door and let them walk in first. If you hear them say "WOW" with in the first 5 steps in the property you know you have them as a tenant should YOU want them.
If you want more tips, do one of two things. Go to my profile and read it and then look at numerous responses I have given over the last 20 years OR, DM me and we can do coffee or lunch and I would be happy to tell you what I know about investment real estate, with strong emphasis on duplex investing. Cheers. Joe