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Doing the Analysis and this duplex seems to cash flow nicely. This is probably a "C" neighborhood. Currently has 2 tenants generating $1421 per month. This is my first attempted purchase. I tried to be conservative thinking that the house will not appreciate (although it probably will only appreciate at 1%.
Here's some things i see:
Cap Ex needs to be 4-5%
Repairs need to be 10%
What is the home warranty expense?
Water bill will be much more than $20 if your paying it
Is electric metered separately?
If you can get it for that price, it will be probably be a good deal but it will likely get bid up a lot higher.
Hi Doug - I am an owner in the city and have some initial thoughts to share on the expenses side.
Initially looking over I think you are a little light on a few items:
Water/sewer - if you as the landlord are responsible to pay for water (most likely you will be) log in to the Baltimore City public works website and look at the most recent bill - http://cityservices.baltimorecity.gov/water/
One of my duplexes operates around $65/mo for water and the other has crept up to $150/mo - identical buildings, side-by-side, just different tenants, so always a good idea to double check actuals.
Insurance - get a quote if you want to tweak a bit. You may be close there on a monthly basis, that looks close to what I pay on one of my duplexes. I believe mine are about $60/mo.
Capex - looks light to me but this can all depend on the current condition and how conservative you want to be.
Repairs/Maintenance - looks light to me - I like to have 5% - 10% of gross income in there depending on the deal.
Taxes - double check if you haven't already on the Baltimore City public works site to get the actual bill - plan to appeal if they are high, but run with the as-is number in your numbers for now.
Hope this helps!
Thanks Heath. This is very helpful
@Doug Owens I would say your est of cap ex and repairs is way low. I would figure more like 10% between the two. For me the 50% rule is pretty good for baltimore in neighborhoods like this. You are a about $2,300 below that for your expenses.
If the property is in great condition that might be a fair price. But that neighborhood has an average sale price of $43,000 ( they may be old numbers)
I don't know why but the P&I number is wrong. A 60K mortgage is about 360 a month.
I would be suspicious about 5K renovations.
House has to be flawless. People will be paying $1400 if it is nicely done.
Water will be higher ( close to $50+ if not more. If house sits vacant, Baltimore city send out $27 bill each month.
I dont know the address, so you might be right,but I would also double check the tax assessment.
Thanks for the tips. Ultimately, we decided to pass on this one. Going for a better neighborhood