Potential First MFH Property

3 Replies

Hi BP Community! This my first post. 

I'm looking at my first potential investment property. It's a duplex in a C class neighborhood.

Below are the expenses:

  • Purchase price: $94,000 (conventional financing 25% down w/ 5.375% interest rate)
  • Total Rent: $1,250 (both units are identical 2/1)
  • Taxes: $75
  • Insurance: $8.33
  • Vacancy: $125.00 (10%)
  • Repairs: $63.50 (5%)
  • CapEx: $63.50 (5%)
  • Prop. Mgmt: $125.00 (10%)
  • Tenant Placement: $52.08

Below are the income values:

  • NOI: $3,237.64
  • Monthly Cashflow: $269.80
  • CoC: 11.70%
  • How does it compare against the 2% Rule: 1.33%

The property has a new roof, new windows, new A/C in both units and seems move-in ready. It's about 80 minutes from my primary residence. 

What are your thoughts on this property? Is there something else I should be considering? Also, I'm a bit concerned with finding tenants in this area. I checked the local police stats site and this neighborhood has very low reported crime.

Updated over 3 years ago

*insurance is 83.33 a month (est $1000 per year)

Heya... quick question. Your insurance is $100 per year? 

Overall, not knowing your market, hard to say. Looks reasonable, though at 1.33%. That just happens to be our minimum. The interest rate seems a bit high. Maybe that's due to the low loan amount? Anyway, keep us posted and I wish you success with this and other properties!

Hi @Stan Hill , thanks for the reply. The insurance amount is $83.33/month.  Do you have pointers on what to look for with respect to class C areas?  Most of the employers in that area are hospitals and utility companies. The median household income in this area is $33k.

Howdy @Jovon Itwaru

Welcome to BP.  First property analysis looks decent.  Here's my 2 bits.

CapEx - I always go in with 10% until I can have the property inspected. I understand it looks move-in ready with some recent updates. But I want to know the current condition and life expectancy of all major components and appliances. The inspection report will allow you to develop a more accurate CapEx reserves requirement.

What are the Rental Market rates for the area?  Any room to increase rents?