Duplex under Contract

1 Reply

Hey guys,

Here are the details on my latest duplex. Previous owner spent $60k last year on windows, siding, roof, and HVAC. Very clean house. Each unit is 2 bed, 1 bath. Retail value is $170k in my market. 

Purchase Price: $160,000, $0 Down

Terms: Owner financed, 5% interest, 15 year amortization

Income

Rent: 2 x $850

Monthly Expenses:

Lawn Care: $100

Taxes: $100

Insurance: $85

Maintenance: $150

Morgage: $1265

Vacancy: $100

Total: $1800


The deal looses $100 per month before factoring property management costs. I self manage and do the maintenance on all of my units so the costs will probably be lower than stated above. 

Would you have purchased it?

Nope, @Luke Jackson , I would not have bought that property. You're already under water and I think your expense numbers are too optimistic. The 15-year amortization is going to kill you. You could end up way closer to ($500) each month.

You're not accounting for water/sewer, CapEx, or admin/professional fees. Vacancy looks low. It's a mistake not to account for Management for 2 reasons:

  1. Management is a job and you deserve to be compensated for it.
  2. In the grand scheme of things, Management is a low-value task. If (when) you decide to stop self-managing, you need to know that this property will stand on it's own, which it already isn't.

Good luck with this one, Luke! You're going to need it.