Need advise on potential Duplex

5 Replies

Hey BP!

I was hoping to get some input on a potential opportunity that has come my way. I have yet to see the property but I ran some very conservative numbers and am still showing decent cash flow. The duplex has already been renovated so it is doubtful that it will need $10,000 in repairs but I want to err on the side of caution. Rents in the area support $650/unit at the low end. 

Purchase Price:$78,000.00

Purchase Closing Costs:$1,500.00

Estimated Repairs:$10,000.00

Total Project Cost:$89,500.00

After Repair Value:$90,000.00

Down Payment:$5,250.00

Loan Amount:$72,750.00

Amortized Over:30 years

Loan Interest Rate:4.00%

Monthly P&I: $347.32

Total Cash Needed

By Borrower:$16,750.00

Monthly Income: $1,300.00

Monthly Expenses: $1,011.15

Monthly Cashflow: $288.85

Pro Forma Cap Rate: 8.53%

NOI: $7,634.00

Total Cash Needed: $16,750.00

Cash on Cash ROI: 20.69%

Purchase Cap Rate: 9.79%

Total operating expenses: $663.83

Mortgage expenses: $347.32

Vacancy:$78.00

Repairs :$130.00

CapEx:$130.00

Insurance:$100.00

Management:$130.00

P&I:$347.32

Property Taxes:$95.83

Income-Expense Ratio (2% Rule): 1.45%

Total Initial Equity: $17,250.00

Typical Cap Rate: 8.00%

Gross Rent Multiplier: 5.00

Debt Coverage Ratio: 1.83%

ARV based on Cap Rate: $95,425.00

Income-Expense Ratio (2% Rule): 1.45%

Total Initial Equity: $17,250.00

Typical Cap Rate: 8.00%

Gross Rent Multiplier: 5.00

Debt Coverage Ratio: 1.83%

ARV based on Cap Rate: $95,425.00

Updated about 3 years ago

ADVICE***

@Billy Mehlinger

I would look to buy at 65k then with closing costs and estimated rehab of 10k on top of that, you should a pretty steady cash flow. 

is this seller financing since you DP is so low?

Just realized I misspelled ADVICE in the title. Pardon my typo.

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