Duplex Analysis- Help- How does this look and what else needed?

6 Replies

Email I received:

"Deal fell through do to financing and we are looking for a quick close.

3 beds 1.5 baths each side with a living room and den or potential 4th bedroom downstairs.

Both have a single car garage and an additional storage space.

Total Square Feet 2,675

Lot is 50 x 169

One side in great condition and is rented to a relative MTM. The other side is vacant and needs to be rehabbed to rent. Probably about 10k to get top rent in the area. Roof is less than 5 years old HVAC and Windows are new. Both sides can be rented for $1,400 each.

Asking $235,000"

** No pictures sent and none in the MLS from previous listings so they have been requested

** Numbers I calculated if they will take a financed offer.  I do not want to pay cash- it would be all I have- if this is a mistake, please let me know alternate solutions.  I am open to being creative.  

$2,800.00MONTHLY INCOME

$1,749.56MONTHLY EXPENSES

$1,050.44MONTHLY CASHFLOW

10.09%PRO FORMA CAP

$23,702.00NOI

$76,298.00TOTAL CASH NEEDED

16.52%CASH ON CASH ROI

10.09%PURCHASE CAP RATE

--Any thoughts or opinions on this?  What additional info do I need that I should gather before going to see the property? 

Thanks so much!  

@Kelly Kormos

The analysis numbers you posted are yours or pro forma numbers they sent you?

If there is only $1050 monthly left over after paying the expenses then where does the $23,702 NOI come from? It looks more like 1050*12 = 12,600 annual, which is about 5% cap rate.

@Kelly Kormos

Sorry I see what you did now.  You have the mortgage included in expenses.  Those numbers are good if they are all correct.  My only concern is your operating expenses (everything but mortgage) are only 28% of rents which seems really low.  I would make sure you know what all the expenses really are.

If your putting 25% down I assume, the numbers look good. The only thing that may get in your way is the rehab might cost more than expected but your cash flow is good enough to cover the cost.

@Derek Kirkwood the expenses I used were taxes and insurance.  also repairs and vacancy done separately.  What am I missing?  Thank you for response!

@Kelly Kormos

Property manager, even if you are self-managing it would be good to know in case you want to hire it out later

Utilities.  Sometimes duplexes have separate metering so that you can have tenants pay it but it seems more common that landlord pays at least some, with the most common being water.  Landlords usually pay utilities for any common areas, not sure if this property has any.

CapEx. Save some each month for the big long term expenses. Unless you included that in repairs already.

Does the landlord pay anything for landscaping?

@Derek Kirkwood I did calculate cap ex so good there!  I will find out about landlord paid expenses.  Thank you!

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