Victorian Duplex Deal Analysis

[Charlie Anne]

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!