Rooming house investing // jitters
I have an opportunity to purchase a duplex in a C/D neighborhood -- 8br/6ba total. It's a newer property (2009) with very little maintenance (just some carpet, paint in some rooms, etc.), new HVAC, great roof, etc.
Though it is not a great neighborhood currently, it is right down the street from a MAJOR Atlanta infrastructure project that has already begun and will finish in 5-10 years. I have wanted to buy something in this neighborhood for a long time.
I have networked with someone who is recommending setting this up as a rooming house, no leases but billed monthly (not weekly).
Here's how it pencils out:
Purchase price:
$100,000 // +$5,000 for conventional mortgage closing
(An identical duplex on the same street recently sold for $123,000)
Initial renovations:
$5,000
Rent:
$500 x 8 = $4,000/month
Income - Coin Laundry:
$200/month
Total income:
$4,200
Monthly Expense Breakdown:
Debt service: $800 (P/I/T/I)
Management: $400
Repairs: $400
Capex savings: $400
Gas: $150
Electric: $150
Water: $150
Internet/Cable: $150
Vacancy: $750 (planning on 1-2 rooms empty a month)
Total monthly expense:
TOTAL: $3,350
Cash flow:
TOTAL: $8,500
QUESTIONS:
1) Do these numbers seem conservative? Inflated? Am I missing anything?
2) Am I crazy for thinking of giving this a try?
3) This property could also be set up as a Section 8 duplex for $1,000 a side. Those numbers pencil out too, so there is an exit strategy if the rooming house is too much aggravation. I'm intrigued by the rooming house setup, but do you think it might be better to just go for a conventional rental setup?
Thank you for your assistance in sorting this through!