North Texas Duplex Analysis

9 Replies

I'm looking on a little feedback for this Duplex I'm considering.  It's right in the middle of metro area, close to airports, highways, community colleges, etc.  The duplex consist of 2  2 bdr/2bth,2 car garage units with split bedrooms. The same owner has had it for 20+ years.  The units could use flooring, countertop, and paint updating, but it isn't necessarily needed.  The duplexes in the area are in similar shape and the avg DOM for rentals is 7-14 days.

Roof is 3 years old

Appliances less than 2 years old, expect for 1 stove.

I need to double check on water heaters and HVAC

Sprinkler System

Nice sized fenced backyards

Both sides are leased through 12/2017

Yearly #'s

Mort - $9948

Rents - $26220 (w/5% vacancy)

Taxes -$5100

Ins $1600

Mgmt(i plan on self managing) $2208

Repairs-$1380(5% of gross rent)

CapEx - $1380(5% of gross rent)

Leaves me with about $371/mo of cashflow or $4450 yearly.  It's a 8% of initial investment(i shoot for at least 10%).  With the Property Mgmt removed the #'s change to 12% and $6660 of yearly cashflow.

@Bret Blackburn initially looks like a good deal but hard to say without a little more info. Rents are $1100 a side? What is your purchase price? What city is this in? For the rents you want what is your repair estimate? Is it vacant or does it have tenants? What are current rents?

@Bret Blackburn

What city? At 2,200 in rent you would be looking to get it under 140k. Your capex shouldn't be a % of gross, it's based on the total out of pocket costs if all capex complements went in the shitter, divided by the remaining total useful life of all components. Maybe that's how you arrived at your 5% but it doesn't look like it.

@Logan Hassinger
Thanks for responding
That's not how I estimated capex, I was estimating based on a % of rental income. I know it's not very accurate. The unit is in NRH and I can't get close to a $140k purchase price. I haven't seen deals that generate $2200 rent in DFW that would only costs $140k. I must not be looking in the right areas.

Bret, I'm familiar with most all of the duplexes in the city North of 820.  Let me know if I can help you evaluate.  What is the price you are looking at paying?  From the numbers you have given I'm assuming around 220K based on a 25% down payment.  Is it one of the 2 story duplexes?

Also, I would look at the current tenants very carefully and find out from the owner how they were initially vetted.  The only evictions I've had to do for my clients have been from inherited tenants.  Finding good tenants takes care of the majority of issues when it comes to managing rental property.  You can definitely self manage since your local, with the right contacts.

As a local investor I think it's too much to pay personally. I don't see much upside to it. Rents are at an all time high here, not much room for appreciation (especially in a duplex), taxes will go up as all these new values hit the tax roll, etc... If I'm putting 50-60K into a deal I better be cash flowing more than that and I always want to be buying into some equity as well.

Also, if you have AC units running on R22 and one goes out you could have a significant cap ex expense.  There are very few places that have R22 condensing units left and you may have to go into a full 410A replacement which isn't cheap. That is something that is coming up more and more around here so we work that into our numbers now.

Of course, this all depends on your goals and what you are trying to achieve.  Feel free to reach out if I can help you with anything.  Best of luck!

@Andy W. - ah yes, those were the days.  I can still find a used one here and there sometimes but we are going to probably flip over to ductless mini-split systems.  More efficient, can control temp in each room, no duct work in attic, etc... With rising cost to meet building codes and standards for efficient new homes I've heard some chatter from one of the largest home builders in the nation that they may be going to mini-split systems in their new homes soon.  This would save money in numerous places of the construction and also enable the builder to have vaulted ceilings and such since there would be no mechanicals or ducts in the attic.  I've seen specs on these things where 1 condensing unit is able to run 6 rooms, all separate temp controls, and maintain around a 25-30 SEER.  Many other countries and commercial buildings are using them.  My next HVAC issue will be a strong contender for doing one of these units.  I'd love to have accurate temp control in every room.  The only downside I've found is you have to have a wall mounted unit in each room.  I'd take that over ceiling vents and hot attic ducts any day.