Minneapolis, MN · Member since 2016 · 48 posts · 9 votes
Here we go:
I am analyzing a Duplex in Orono, MN. 55331.
It is a side by side 3 bed 2 bath (2732 total sq ft) with a 2 door garage, on a street with a neighborhood "private" beach at the end. (so it is very close to the water)
My plan is to live in it with my wife for 1-2 years.
I don't know what it is currently renting for, but the market is at about $1800 for a 3/2.
Also, water is probably not sub metered. But electric might be. Will find out soon.
Asking Price is $360,000 Going to owner occupy, 5% down
So, my wife and I will be paying about $800ish dollars per month while living there. Then when we move out, we should be able to cashflow $1,000+ per month!
Sounds pretty sweet right. I likely will be pulling the trigger unless something comes up in inspection.
Am I missing anything? Or are there other things to consider? IF you were me, would you pull the trigger?
Hi Bryant. Make sure to run these numbers in the BP Calculator. From my initial look, this does seem as though it would be a cash-flowing property once its fully rented. However, I'm seeing more of a $450ish/mo in cashflow(unless you don't have to pay for tenants electricity). Your PM seems low. Most PM's would charge around 10% of the rents plus a one month for signing a tenant. Is there any rehab work needed? This would need to factored in as well. Otherwise, it seems solid as a positive cash-flowing property once its fully rented. Either way, good luck on the purchase. If you do decide to purchase, I would be looking to have this fully rented on day 366 of living there.
Hi Bryant. Make sure to run these numbers in the BP Calculator. From my initial look, this does seem as though it would be a cash-flowing property once its fully rented. However, I'm seeing more of a $450ish/mo in cashflow(unless you don't have to pay for tenants electricity). Your PM seems low. Most PM's would charge around 10% of the rents plus a one month for signing a tenant. Is there any rehab work needed? This would need to factored in as well. Otherwise, it seems solid as a positive cash-flowing property once its fully rented. Either way, good luck on the purchase. If you do decide to purchase, I would be looking to have this fully rented on day 366 of living there.
Based on the numbers you have it looks good. Get with an investor friendly Realtor (if you haven't already) to determine a sound ARV/Market Value for the property. Also have them help confirm the rental rates. Both will help determine your maximum offer. Get pre-approved for the loan as soon as possible. Shows you are a serious Buyer.
If you proceed with an offer use the inspection report to determine what needs to be replaced/repaired now and what to include in your CapEx reserves. You can use it to help justify a lower offer.
How did the inside of that one look? I saw it when it first listed and had one of our investors show some interest, but we found another that fit his needs better.
Repairs and maintenance are probably under planned in the scenario but you are in Orono schools and if you are house hacking you should be well positioned. It's not a home run on price, fully valued IMO given condition. If you can find your way to slowly upgrade the owner occupied unit over the first few months, it will serve you well on the rental market when you move. Good luck!
I factored in 10% PM, 4-5% Rep/Maint, 4-5% CapEx, and bumped up the Electricity figures as I doubt that it would be only $50/mo to provide elect. for two units(fully rented). But again, this was just my rough estimate. I'm sure once you've gotten all the hard figures, it would provide a much closer picture of the return on investment.
@Bryant Amundson How did this work out for you? I'm also interested in possibly house hacking in this area and would love to hear how things ended up for you!