Victorian Duplex Deal Analysis
I have found a duplex I'm considering making an offer on. I'd like some advice on my deal analysis - am I missing anything?
It's a 1910 victorian style home with new HVACs in each unit, new windows & new floors. I'm unclear on the condition of the roof, pipes & electrical at the moment, but building in 10% for capex & 10% for repairs.
Listing Price: $128,000
Rent Income: $1,290
Costs
- Mortgage: $520
- Insurance: $75
- Property Manager: $90
- Vacancy 8%: 103
- Capex 10%: $130
- Repairs 10%: $130
- Property Taxes: $30
- Water/Sewer: $60
- Lawn Care: Tenants
- Garbage: Tenants
- Total Costs: $1,138
- Estimated Cashflow: $152
This is low cashflow for a duplex, but I'm considering it for 2 reasons:
1) The market is appreciating at 8% YoY
2) I think rent can be raised by $100 on each side. If that's the case in 1 year it could be cash flowing for $352 which is closer to the $200 per door goal. Additionally, water costs could be transferred to the tenants as well for a total cashflow of $152 + $200 + $60 = $412.
What I like about this duplex:
- In the up & coming part of town
- Rent ready with 2 tenants in place
- Very cheap property taxes
- High appreciation
What I don't like about this duplex:
- It's from 1910 which worries me regarding repairs
- It's by a river (but not in the flood zone)
- The neighborhood has some nice homes & some run down homes
I'd appreciate any input!