Hi all! Wondering everyone's thoughts on this deal. It's a 3br and 2 bath each side duplex. I'm looking to become a first time home buyer (I'm 24). You can see my #s below, but I'm figuring I'll be paying around ($700) a month while living there. A lot of duplex success stories have their whole mortgage paid for. Maybe I get the price down a little, maybe I get another roommate for an extra $300, etc, but just getting your thoughts! Thanks.
|Income ($1,000 other side; $300 friend)||$15,600||$1,300|
|Monthly Expenses - Total from below||$24,080||$2,007|
This is awesome! My very first property was a duplex (just like you!) in PA. I still own it, though my situation has changed and my CF is less now (story for another day). Anyways, some points here:
1) always always ask for concessions from seller (all they can say is "no" so you have nothing to lose). Ask for price break, seller assist, or fix any major repairs needed. Even get them to replace dated systems (HW heater, AC, etc) whose deferred maintenance will likely cost you in the next 3-5 years or so.
2) Another creative (but depending on how you do it) possibly more work intensive idea to improve cash-flow --> rent out the other unit by THE ROOM. Seek young professionals, or college grad students and rent out that 3 BR for $400-500 per room. That brings you as much as $500 more per month.
3) AirBNB the other unit - many possibilities here!
I am a big fan of duplexes as well. I would suggest you run the numbers for when you no longer live there and see how they will work out then. If the two sides are the same, then you are ahead $300 month, not sure I would want that much of a mortgage for few hundred a month in cash flow. I am from Stevens Point, and that price for a duplex seems high, but if you know your market, then I hope the best for you.
@Nickolas Boylan Welcome to BP! I hope you get in the game soon!
Looks like about the reality, which is so so. Admittedly, you're better off in the position of owning and having a smaller cost of living than otherwise, but the cash flows on a duplex, especially in this price point, aren't very substantial.
Where are you looking for 234,9? And what is the age of the building? I think that'll make a difference with regards to the accuracy of maintenance and capex. I have a four family in Milwaukee and with gross rents at about 3k I'm finding 15% combined maintenance and capex to be accurate. Lots of deferred maintenance around here, with a 1908 construction date...
Additionally, while there's a lot fewer of them around, consider a four family. One in my neighborhood just sold for 230k with 4 one bedrooms. Gross rents there at least 2800 unoccupied, 2100 occupied. Plus, if you were willing to do a little airbnb action on site you could really juice your return.
Good luck and keep at it! Let me know if I can help.
Hey @Nickolas Boylan welcome to BP! I'm with @Andrew Bartelt on this one. It's important to know what you'll pay now, but if your goal is to one day move out and acquire more rentals, definitely run the numbers as if you're not going to live there.
Based on the purchase price, I'm guessing it's in a nice area, so you should probably be able to get more than $1,000 with 3br 2ba in each unit. Another expense to consider is the water bill. For most duplexes the landlord pays for water & sewer, and a 3/3 will use a decent amount. I recently purchased a 3/3 and the water bill is about $125/mo with both units occupied by families.
That said, it looks like this duplex would have slightly negative cash flow if you moved out (based on rent of $1,000/unit). You could also look into Airbnb for extra income.
Hope this helps!
@Dave Rav – thanks for the tips! I definitely have thought about Air BnB, especially MY side. This way my roommate and I can stay at our family’s house if we get business or we can rent the 3rd bedroom, etc. I found out the rent is only $850 for the other side (seems low), so the $400-a-room would obviously be a much better thought.
@Andrew Bartelt – the numbers don’t look great for when I leave unless the rent $ went up. I still have to look into the “market” for rent. Any advice there? The large 3bd/2bath duplex seems pretty nice for this price point, and it’s in a good location.
@Joshua Martin – I was looking around 100K-240K – the big aspect for me is finding a good investment property. I don’t mind living in something cheaper and cash-flowing, or looking into a bigger investment and working hard on that mortgage. Everything I’ve run numbers on is pretty awful, but I want to get into the RE game… and this place is located where I’d like to be, the numbers seemed okay, etc. Your tips are helpful though. Like I said above, the rent is $850 one side, so less than $1K.
Thanks for the advice you guys.
No problem. Best of luck!
The market rent question is easy to answer. Look on Craig's List. Find similar duplexes in the area, closer to property the better, and see what the going rates are. It has been a year or so since I looked in Fox River area for rentals, but when I did I saw a lot of duplexes for less than 100k.
Keep on looking and running the numbers, inventory is very tight in Stevens Point, and finding cash flowing investment property is a real challenge here. I expect that to be true in most any market worth buying in now. Don't buy a dud just to get in the game. Be patient and remember cash is king when the next recession hits. Good luck.
Hi Nickolas. My first deal was a duplex also. My only question with your #s is will you be paying water/sewer/garbage? I paid those in full for my first year before adding on a utility fee. Depending on the cost of these your #s could change. Good luck!
@Benjamin M. Water, yes... the others I don’t know yet!
Nickolas, the rent on one side seems low for this area, especially being 3 br 2 ba. Are they long term tenants? I would be interested in hearing location and year built.
Welcome to BP and the investing world, I am fairly new to the site as well. Currently in Neenah, investor here and also real estate agent and am geared towards multi family. Please let me know if you need help. I know right now in the area duplexes that are priced right are not on the market for very long. Feel free to get in touch via my email or message if you would like to discuss further. Would love to join forces with other investors in the area.