Duplex deal in Garland, TX - Newbie needs help in analyzing

5 Replies

Hi all,

I'm very excited to be a new member here.

I'm into the option period of a duplex in Garland, tx. The 2 units are platted separately so I have to get 2 separate loans and do 2 separate closings. The good thing about this is that I can sell one off if I want to later but for now I have to get 2 of everything.

Here is the deal just for one unit (the details are the same for both):

  • Purchase price: $95,000
  • No repairs needed (current owner is taking care of the big things found in the inspection)
  • Current tenant pays $925/month
  • Assuming 5% vacancy and CapEx
  • Assuming 8% repairs
  • Insurance is $95/month
  • Taxes are $153/month

With a conventional loan of 25% down and a rate of 4.38% here is what the calculator gives me:

  • NOI: $6,128.48
  • Monthly Cash Flow: $154.97
  • Total Cash Needed: $28,590
  • COC ROI: 6.5%
  • Pro Forma Cap: 6.14%
  • Purchase Cap: 6.45%
  • 50% rule monthly cash flow: $106.76
  • Income-Expense Ratio (2% Rule): 0.93%
  • Total Initial Equity: $23,750.00
  • Gross Rent Multiplier: 8.56
  • Debt Coverage Ratio: 1.44%

Is this a good deal?

Also, one of the units was remodeled with new floors and appliances but is currently vacant. Seller had a tenant that wanted to move in for $1049/month but they would be bringing a german shepard. I'm not a fan of those dogs. I've seen what they can do. Not something I want on my first rental property. So I asked them not to do that. But maybe its a good sign on what rents could be?

The other unit that is occupied could use some updating when the tenant leaves but I don't have to. And the current tenant owns the fridge so I will likely need to buy a new one.

Thanks everyone!

@Tony Hernandez

Using the BP calculator is definitely a good way to get started, but those rents don't support a purchase price of 95k. At 95k purchase price you need rents around 1200/month/unit. I'm from DFW and see deals like that all the time. You would need a unit price of 65-70k with the current rents. The expenses you see on paper aren't what will be leaving you bank account. 

I would agree the numbers to me also look pretty tight. If there are ways to extract more value it could help the deal. Good luck and thanks for sharing.

It's hard to get a 1% deal to cash flow in Dallas due to high tax/insurance costs. It's not a deal I would do, but it depends on your goals. Be careful of deferred maintenance on older houses. One major plumbing issue due to old cast iron pipes and there goes 3 years of income (ask me how I know).

thanks everyone for the input. I decided to poss on this deal. I still have a lot to learn and I didn't want to tie up my precious capital in a small returning deal.

wise choice. Just continue to learn and ask questions. 

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