My First Deal - $60k Duplex - What do you think?

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My First Deal - $60k Duplex - What do you think?

Josh Robbins
Rochester, NY · Member since 2015 · 51 posts · 12 votes

Hi All,

9 months ago i decided i wanted to invest in real estate and i'm finally taking action and got my first investment under contract (home inspection next week). I've run the numbers but would love to hear what people think. I actually plan on paying with this out of my HELOC from my primary, doing some cosmetic work to it, and then in 6 months refinancing at the appraised value. i believe an appraisal with under $2k of work should come in around $85k. Details below but let me know if you would like any other information.

Purchase Price: $60,000

2 Family, each unit 3/1 , 2024 sq ft.

Current Rents: $775 and $725 - both units occupied with one year leases

Location South Central Troy, NY

Taxes: $4,687  (sadly this is not a typo - property is assessed at $103,000 which i will contest, hopefully bringing this down)

Insurance: $800

Water/Sewer $918

Garbage/Recycling: $232

Other utilities are paid by tenants

I have no actuals for maintenance/repairs etc but the roof is old and will need to be replaced in the next 5 years.  Electrical was updated 2 years ago.  Building was built in 1910.

I appreciate any feedback

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Account Closed
Uniontown, OH · Member since 2016 · 29 posts · 13 votes
10y
Am I the only one who thinks this $75/mo of positive cash flow after you account for vacancy, pm, capx, etc on a $60,000 duplex is a pretty weak investment?
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  • Account Closed
    Uniontown, OH · Member since 2016 · 29 posts · 13 votes
    10y
    Josh Robbins Last week I went under contract on a 4-unit building in a C+ neighborhood near me for $63,500 + $2,000 in est repairs. Gross monthly income is $2,175 with $1,513 in estimated expenses. At the end of the day it will cash flow around $660 a month from the building and stand at about 12.50% cap rate. My expenses are: Taxes: $1245 Utilities and Insurance: $6,480 I use very conservative estimates of 10% for vacancy, 10% for maintenance, 10% for capx and 10% for management. Gives me the worst scenario $10,440 margin. Considering calculations above I would not usually get a property if its under 10% cap rate ($545 of positive cash flow a month in my deal). At the very least you want to see $100 per unit per month with very conservative numbers. In your case I would want to see $200 in positive cash flow with 10% across the board.
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  • Josh Robbins
    OP
    Rochester, NY · Member since 2015 · 51 posts · 12 votes
    10y

    thanks so much @Account Closed, this is extremely helpful.  It appears that your numbers are for an all cash purchase, is that correct?  Is your criteria for cashflow based on an all cash purchase?

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  • Account Closed
    Uniontown, OH · Member since 2016 · 29 posts · 13 votes
    10y

    Yes I prefer all cash purchases.

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  • Josh Robbins
    OP
    Rochester, NY · Member since 2015 · 51 posts · 12 votes
    10y

    Thanks @Account Closed, the $75/mo estimate in the earlier post was with financing. I actually plan on financing this 100% by leveraging a HELOC. That's obviously keeping the cash flow numbers lower. I really appreciate the response and understanding your criteria, it was very helpful.

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