Need some first deal advice ASAP!

5 Replies

My opinion, for what it's worth:

The existing gross rents to purchase price spread is what I would consider low for a duplex - expect cash flow after credits for maintenance to be thin.

The 3/3/2 arrangement seems to be overkill for a duplex, especially the third bathroom. I don't know your market price points but I would be concerned with demand when the tenant base will be a family and your property will compete with SFRs.

Nine years old means you are 40-50% of expected life on roof and HVAC.

If you could turn the 3/3 into a per-room rental (ex., college roommates), I believe you could squeeze more rent out of it. Likely more management headache as well.

It's easier to recover from a small mistake than a large one, as you've somewhat already insinuated with your concerns about price and money down.

Good luck!

If 220k is what properties are going for you won't be getting ripped off you'd be getting the property for what it is worth. 

Looks like it should produce a 6.3% return.

Promotion
Sharestates
America's Private Lender
Receive Fix and Flip Funding Approval In As Little As 24 Hours!
Sharestates helps developers and brokers secure funding quickly with the most competitive terms.
Get Funded

@Andrew Stormer  

I am newer to investing and putting together my deal analysis processes has been a focus of mine recently.

My calculations and based on the info you provided above:

5%@ 30 years

20% down

Property management, $0

Repairs/maintenance budgeting, $0

Utilities, $0

Vacancy rate, 10%

----------------------------------------------

Cashflow per door is $270

Cash/Cash, 15%

Cap Rate, 8%

The deal looks pretty good.

Personally, I budget conservatively and include expenses associated with PM, repairs/maintenance and utilities when applicable. $55K is a lot of money to have tied up, but you have to take subjective money into account as well. Is it a quality property? Well maintained? Something a tenant will like to come home to?

If you like, provide your email and I will send you the Excel spreadsheet I used to calculate this.

Thanks for the opportunity to contribute, Chris

have you calculated cash flow based off piti and expected maintenance and vacancies? My quick figures in my head show a $400-$500 cash flow a month situation, which would be about a 10% return. Do you have reserves in place after paying that $55,000 out of pocket? How many properties are for sale in the area?  A lot depends on your market and expected returns.