So I just purchased a deal and closed this week . The new property is a duplex . I have not targeted duplexes because I have focusing on targeting larger units however, this deal was put in front of me and it seemed to good to be true ! What do you think? Here are the details .
Purchase price : $32,0000
Annual taxes: $2200
I was able to use leverage on this property so...
$325 a month mortgage with escrowed taxes and insurance .
House is actually In excellent condition with new windows roof and siding . Some of the appliances are older but I'm not overall concerned about problems in the near future .
We do pay water in my area usually it's about 200 per unit per year so 33$ per month
The utilities are separate tenant pays .
We have in-house management for our properties so total cost on that is around $100.00 a month and no other property management fees . This does not include supplies obviously .
Current rental income $1300 per month
I know what I have it calculated cash flowing but I wanted to see what you guys come up with ! I am newer to the forum and I am thinking this cash flows pretty well for a leveraged duplex . Let me know what you all think or if you have any other questions about the numbers !
Any insight would be helpful!
Looks like a winner to me! Your expenses will somewhat depend on the age of the property and what your willing to cover (snow removal, lawn service, etc). But you have a ton of padding in there. I would guess you will cashflow in the $500/mth range which makes for almost a 50% cash on cash return. Those numbers are tough to beat! I can't get anywhere close to that in my area!
What is your cost of insurance?
Even with the cost of insurance subtracted, you're still looking at about $6k/year. That means you are made whole with your cash in 2 years. I prefer one year, but there is so little in actual dollars out of pocket from the beginning,...does it have a "sister"?
That's about where I have it as well! This area I am in is amazing if you get the right deal ! Area is very important when it comes the Investing ! The overall condition of the home is actually very good .
Insurance was about 800$ but I went pretty heavy on the insurance obviously . I actually found another 2 family just like it near the area I may go after . I have been trying to target larger. But these are good deals and my area has a need for 2 bedroom apartments so I have good luck renting them to great tenants !
Nice! Looks like you got a great deal with a great cash on cash return! the great thing about it is that because of the potential to make your money back in two years you will have enough cushion for any capex repairs that come along later on, wish doesnt sound like much considering the new roof and siding. You can also reinvest it in it at that time if it makes sense by updating thos appliances, maybe itll give you another 200/mo income, which could be a 40% ROI if it costs around 5k to update. I also wonder what the market value of the property is now? depeneding on your desired cash on cash return, you may even have room to refinance and buy more of these!
Good luck to you sir!
@Tommy Mejia very good point about current value . The place was vacant so I know that hurt the value of the property . My wife is a real estate agent so we heard of this deal and knew that the owner was motivated to sell. We know we got a good deal my area is pretty inexpensive . I believe I could list it for 55 tomorrow and get 45 for it . It is know fully rented and everyone is moving in for November 1st which will raise its value a bit . A top performing duplex in a great area here goes for $90k a top performing duplex in a medium area here goes for $50-70k .
If you could get $50K for it today, assuming your wife does not charge a listing fee, that's $18K profit. It will take you 3 years to make that from the rents. You would be missing a far better opportunity by not selling and finding more to flip than by holding on and dealing with potential tenant and repair issues down the road. Keeping this property does not add up financially. Flipping one of these a year would make you 3X the return of keeping it.
Or keeping a couple of these a year could be a pretty quick way to earn some serious passive income and a very early retirement. I would hold, not a big enough payout to give up the big cashflow.
If you sell and flip your just getting yourself another job.
@John Kesner I agree with you, I am more of a cash flow minded investor . I would rather enjoy that cash flow for a long time as opposed to selling , having closing cost , and then having to roll the earnings into another investment to avoid cap gains . Not to say their is a problem with selling it it's just not my business plan !
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