my first duplex - is this a good deal?

Question

Been talking with an elderly private seller who wants to sell a brick duplex, 2br/1ba. 1540 sq ft. Good location, great shape, HVAC about 15 yrs old, 5 yr roof.  He seemed to think it was worth around 130K based on his improvements, but I'm starting my analysis based on the County taxable market value of $88,850.  He mentioned seller financing, which would be great since I very little to put down, although I believe he still has a mortgage on the property.  Here is what I have come up with:

Gross Mo. Rents 1100  (550/unit)Prop Tax               150Insurance                40PM 10%                110Vac 10%               110maintenance 5%     55CapX 5%                 55Total Mo. Op. Ex.  520Mortgage               424  (I'm new to seller financing, so I've started with a  30yr / 4% / 0 down estimate)Monthly Profit        156

NOI 6,960est price            88,850  (based on county taxable market value)Cap Rate             7.8 %

Ben Leybovich · Answer

So you are willing to go through all of the pain of property ownership over $156/month. May I ask why?

Is this enough to get you out of your job, or is there a bigger picture here :)

Think about it!

Justin Tahilramani · Answer

@Dan Guerrant - It really depends on your local market. I would not be excited about those numbers. Are the units individually metered? Do the tenants pay utilities? Unless the seller is desperate to get out of the deal they are not going to give you a 30yr/4%/0 down. If he does - I would be VERY skeptical.

In most markets you cant rely on tax values. You also should not rely on an owner estimate. Do you know anyone experienced in the area that can help you out?