What's Your Max Offer on This Duplex?

[Mark S.]

Duplex.  15 years old.  2BR/1.5BA units.  900 sq ft each.  Area = C class.

Rents: $500/unit for $1,000/month gross.
TOTAL INCOME: $1,000/mo

Expenses:
Taxes = $55/mo
Insurance = $75/mo
Prop Mgmt = $100/mo
Cap-Ex = $100/mo
Ongoing Maint = $100/mo
Vacancy Loss at 8% = $80/mo
TOTAL EXPENSES: $410/mo

(I will likely finance: 20% down, 5.25% max interest rate for 30 yrs, P&I = $250/mo)

Closing Costs: $5,000
Estimated Repairs: $5,000 (going to visit property shortly, but like to start with $5k).

What's your max offer?  What do you think of this deal?  Thanks in advance.

[John Van Uytven]

Let me show you some of the problems I see with your situation.

You don't say what city this is in.  We don't know what the other duplexes rent for or sell for.

Is the rent low?  Could you fix it, and add value and get more for rent?

You are also going for an easy vacancy rate, 10% is standard, run it at 12% and run your numbers again.  My partner wants us to run theoretical vacancy on a 8 unit, at 25% to see how our number look then.    

Your information is incomplete.

But if you are a fan of the 2% rule.  Then you should pay between $45,000 and $50,000.

If you adhere to the 1% rule, then $100,000.

Keep us updated on how your deal progresses.