3 Duplex Deal! Check my numbers

5 Replies

Three, 2 bedroom 1 bath duplex's . Market Value $195,000

Purchase Price $175,000     20% down,  30yr amortization $751.55

Yearly Expenses 

Property Taxes $2,000

Repairs/Capex $5,508

Insurance $2,500

Vacancy 10% $3,060

No property management due to being 5 minutes from my house.

Yearly Rental Income 

$30,600

They are 100% occupied right now.

Operating Expenses Ratio 36.3%

Debt Coverage Ratio 1.94

Cap rate 10%

COC Return 21.3%

Waiting to hear back on HVAC and roof ages.

Ryan Watkins

Just a few questions and suggestions

1, who pays utilities (water electric trash  )

2, lawn service pest control

My one suggestion to you would be always include at least 10% for property management

when doing analysis just in case you turn it over to a  property manager in the future

@Steve Smith

Sorry, forgot to include tenants pay for all utilities. I would cut the grass and spray for pests myself. I already handle that for one of my shopping centers that is also 5 minutes down the road. 

Are you sure you can get this loan with only 20% down?  I have had to put 25% down on multifamily properties.

Originally posted by @Kelly N. :

Are you sure you can get this loan with only 20% down?  I have had to put 25% down on multifamily properties.

 I will look into this deeper. I sold my previous home to the seller, so we have some history. I'm hoping to convince her to owner finance it for awhile or do a carry back. Trying to avoid using a hard money lender. 

Hi Ryan - I know this response is late as I just came across the thread. Those OpEx/CapEx numbers are probably correct from the seller on a trailing basis, but over time you'll pay more than $900 per unit per year. I'd estimate at least $1,500 per unit to be safe. You'd adjust depending on everything that needs to be replaced....brick or wood siding, central A/C vs window units and baseboard heat, carpet vs vinyl flooring, etc. Those are lumpy expenses that may only come every few years, but they do come.

Regardless of how cheap the properties are, I'd find it difficult to make $425/unit rent turn into positive cash flow in the long term.