Rental property analysis

6 Replies

I'm working on a rental deal with another investor.  This one won't require an agent, investor to investor.

  It is a duplex that is occupied, both units.  Asking price is $39,500, although I'm still negotiating.  I want to make sure my numbers are right here so....

asking price- 39,500

20% down- 7,900

amount financed-31,600

interest rate- 4.5% (I have been pre-approved)

30 yrs

monthly rents-725

p/i monthly payment- 160.11

monthly ins-25

monthly tax-70

PITI-255.11

30% (vacancy/maintenance)-217.50

cashflow- 252.39/ month

Hows that look?  If I had someone else manage it I'd be out another $58 / month.  Tenants are in so I think I'd manage it as long as I could.  Owner seems to be very upfront with me and appears sound from the outside.  Offered owner financing also, but terms are steep.

What do you think?  Also, what can I expect to pay in closing costs?  How does this work without agents?

Thanks in advance!!

Seller also agrees to pay half of closing costs.

@Jeremy Jackson It's very hard to know if this is a deal with only considering the numbers given. It would be better if you had more information on the duplex condition, year built, etc. If inspection and appraisal all look good (generally), it sounds like a good deal to me. I'm curious what your intentions are with this place? Buy and Hold? Just cashflow? If it's buy and hold, why not use a 15-year loan? Do you plan on refinancing within 5 years? In that case, you can sometimes get a better mortgage as a 5/1 ARM and drop monthly payments.

I would want a 7.5% cap rate based on your cost of money of 4.5%.  I usually pay 10% + one months rent for new renter for management.  My maintenance costs are also a little higher.  Based on that I would value at about $38,000.

Good Luck.

Bill

Don't hesitate. Buy it, get the rents to 400 or more per side. Manage it yourself.

If I lived within 50 miles you would be too late. It would be gone. 

I would do a 10 year note. Let the renters pay for it fast.

@Jeremy Jackson  

I don't see any mention of Trash, Sewer or Water in your analysis.  

Are all of those things paid by the tenant now?

Yes, paid by tenants.  My concern at this point is I wanted to be able to leverage cash better.  As it stands I'll need 25% down plus 3700 for closing plus title and survey. 

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