Updated over 6 years ago on . Most recent reply
[Calc Review] Help me analyze this multi-unit deal (San Diego)
*This link comes directly from our calculators, based on information input by the member who posted.
Help me analyze this duplex property located in San Diego. The rental income is based on how much it could rent for AS IS. However, one of the units has a lot of sq ft to be able to add another room. In addition, the garage already has dry wall and I think in the future there could be a possibility of converting it into a studio.
Any feedback is greatly appreciated!
Most Popular Reply
#2 Real Estate Deal Analysis & Advice Contributor
- Investor
- Poway, CA
- 8,157
- Votes |
- 7,031
- Posts
#2 Real Estate Deal Analysis & Advice Contributor
- Investor
- Poway, CA
I would allocate a lot more for maintenance/cap ex. If not owner occupied your interest rate seems too low. If not self managed your PM fee is too low.
ADU rules do not apply to a duplex so you may not legally be able to convert the garage.
The 50% rule shows this as negative over $500/month but at this rent point the 50% rule is very conservative. If we use 45% then negative $325. How much more rent can you get for an extra BR?
As projected on the calculator, I would never recommend a buy and hold RE at a cost of $145K for a max of 9% annual return (at year 15). That is below the lifetime S&P 500 return. Are you expecting better market appreciation or rent appreciation than depicted in the calculator? Is the only value adds adding a BR and possibly converting the garage (which I think is unlikely today but given a few years may be a possibility)?
Good luck