Recipe for Disaster or Road to Riches
I can build brand new 3 bedroom, 2 bath duplex for $110,000 per side ($220,000 per building).
Conservative appraisal $140,000 minimum, real world would be $150,000.
Rent $1300/per side
Taxes $250/month per side(non owner occupied rate)
Insurance $50/month per side
Vacancy $130/month per side
P/I 5%, $110,000 Loan, 30 year Mortgage - $590.51 per side
Maintenance/Cap EX(5%) - $65 per side (after 5 years would have $3900 saved up per side)
HOA/POA - $0 N/A
Total = $1085.51 per side
Monthly income = $214.49 per side or $429 per duplex per month at an initial purchase cost of approx $0(zero - see below)
I know I don't have management, maintenance and cap ex are small, but there is a 5 year warranty on most things like furnace,etc, and 10 years on structural. When I build it is high quality. Management will be handled by me, screen the heck out of renters.
My plan, build with cash, refinance 80% max, get all my money back out and have virtually ZERO into the project. $30,000 to $40,000 equity per side. Keep for minimum 5 years. At the 5 year point, should see rent increases, cap ex and maintenance should still be insignificant but could be accounted for if an investor bought. Either sell each unit individually or I personally live in one side, live there 2 years, sell tax free. Move to the next one, repeat. I am considering doing 3 - 6 buildings (6 - 12 units).
Any input is greatly appreciated.