Investment Analysis for a Duplex

8 Replies

Hey Guys,

So, I'm 21 looking for a duplex. I'm pre-approved and ready to go, but I'm wondering if you guys have any tips on analyzing investments. I know the 1% rule. What should I look out for beyond that?

That's awesome! I got started around the same age in Columbus Ohio. I would just say get your feet wet and you'll learn a lot on your first one. You also want to find a good realtor that can help walk you through the steps. Best of luck! 

Look out for utility bills, who pays what? Verify rents in your area via zillow, apartments.com, etc. Verify taxes and make sure that the property isn't undervalued by the county. Once the property is transferred into your name the taxes may increase... but I wouldn't overstress this unless there's a huge difference in the property valuation. 

Ask a local property manager about vacancy. Call an insurance agent for a quote.

Set aside ample amount of cash for repairs... they will come in a heartbeat.

If you need help message me! :)

Originally posted by @Noah McPherson :

Hey Guys,

So, I'm 21 looking for a duplex. I'm pre-approved and ready to go, but I'm wondering if you guys have any tips on analyzing investments. I know the 1% rule. What should I look out for beyond that?

 That's great Noah. What market are you in? I would use the BP calculator to run potential deals, it'll help you analyze the potential cashflow on specific deals. 

There are a lot of helpful calculators on BP so check deals, but I would make sure not to get too tied up in the numbers and mostly check comps for the area. If you are house hacking your first one, you will want it to be an area you can tolerate living. @Noah McPherson

@Noah McPherson I would recommend you network with other Duluth investors.  You will find out information that will help you refine your search.  Some examples might be, the typical condition of properties, the typical renters in each sub-market of Duluth, what amenities those renters demand in each submarket.  The current "heat" of the market, and so much more.  

@Noah McPherson

I always recommend that clients look at the following when analyzing duplexes in our area:

  • Rents & Terms of current Lease Agreements
  • Owner costs (Are utilities split?)
  • Parking (does the property have non-conforming off-street parking concerns?)
  • Is the property actively licensed as a Rental?  If so, when does license expire?
  • Opportunity to increase rents?
  • Evaluate bedroom dimensions & square footage for each unit
  • Fuel source for both units? Can you convert to natural gas?
  • Estimated short term and long term repairs (ask your Realtor about this) - Because our housing stock is quite old in Duluth, this is one of the most important factors in assessing whether a deal makes financial sense (verify age of mechanicals, roof, windows, water heater(s), appliances, siding, exterior, electrical, etc)
  • Does the building have laundry hookups?
  • Review crime mapping in and around the area

There are obviously a number of additional factors we discuss when evaluation a particular property in a particular area but those talking points tend to be best reviewed/discussed with your trusted Realtor.

Please feel free to shoot me a DM if you have any specific questions that my team can help with!