Need help analyzing duplex as a rental

[Shane Starr]

I’m looking at a duplex that will be sold at auction, and trying to determine if it has potential as a buy-and-hold rental (and if so, what my max bid should be). I’m new to analyzing properties, so I’d appreciate any advice from the community.

If I purchase, I would pay cash. I realize I could make more by using debt, but I like the idea of paid-for rentals.


DETAILS:

It’s a 1-story ranch built in 1984. One side of the duplex is 2BR / 2BA. The other is 2BR / 1BA.

Est. market value: $110-120k (Last sold for $100k in 2000).

Est. rent for Side A: $675/mo (with tenant paying utilities)
Est. rent for Side B: $600/mo (same)
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$1275/mo gross rent X 12 = $15,300 annual

At a potential max bid of $91k, here's what I’m seeing:

$15,300 annual gross rent
- $2464 property tax (2% assessed value of $123k)
- $1000 insurance (estimate)
- $1530 maintenance (10% gross rent)
- $1530 CapEx (10% gross rent)
- $765 vacancy (5% gross rent)
- $1530 property management (10% gross rent. I plan to self-manage, but want to allow for future PM.)
-----------
$6,481 profit / year (or 7.12% cap rate)

Is that a decent return? What am I missing, doing wrong, and/or not considering?

Thanks!