Am I suffering from cold feet?

Question

I currently live in a house hack and was looking to buy a second property strictly as an investment property. I am seeking feedback just to get an understanding of maybe something I am missing. I guess what is stopping me from signing the contract is the amount of cash required. I would still have enough reserves but I am concerned the CoC is not high enough. Anyone have thoughts they could share? I would really appreciate it! See details below.

Property type: Duplex - 2 bed 1 bath (both units)

Purchase Price: 211k (25% down payment)

Interest rate: 4%

Current total rent: 2,200 (both long term tenants i believe I will be able to up rent to 2,300 total)

Cash on Cash return: 9.5%

Projected monthly cash flow: $517

Cash needed: 65k

Sal Orlando · Answer

Thank you for your time insight, Karl! All utilities are paid by current tenants besides sewer. That’s a good call out.

Karl B. · Answer

I don't know what market you're in so I cannot comment as to if it's a good deal VS others in your local market but this deal exceeds the 1% rule and you'd be cash flowing.

Bonus points if the utilities are all submetered so tenants are paying the water/sewer/trash; I'm assuming a 211K duplex will have two gas and electric meters so if the water meters are separate and you have no utilities then the deal isn't bad, especially in this hot market.

Interest rates will rise and so getting a fixed rate and cash flowing $500+ while enjoying the tax breaks of owning real estate seems like a no-brainer here if the units are easy to rent and the local economic market is decent.