So this is our first home purchase...Live in one unit, rent out the other apt.
I was just wondering if everyone could take a look at these numbers and tell me what they think of this deal???
My wife and I are looking at a Duplex right now, in order to rent one unit and live in the other for the foreseeable future (5 years).
The Purchase Price is $75,000 potentially, it's listed for $95,000 but with it having been on the market for the last 15 months the owner is getting desperate for an offer (says the seller's agent to me on the phone) and we will make an offer at $65,000 and hopefully we will get it for the 75k.
Unit 1: 2 bedroom 1 Bath upstairs apartment $600/month with renovations
Unit 2: 2 bedroom 1 Bath but potential to finish downstairs bathroom and Room with egress window etc. $745/month with renovations
It has a 3 car detached garage. Each unit gets a garage but we will rent the 3rd for storage unit for $40.
We will need to put about $30,000 in Renovation cost into it. Meter them out, central air to upstairs unit as well as another furnace.(We are considering just leaving it how it is and putting in the lease agreement that each unit owes half the utility bills on top of their rent, any experience with this issue will be greatly appreciated) Meter them out, new ac/furnace to top unit. VS. Lease states that each unit is responsible for 1/2 utility bills. (Electric, gas, water and, sewage.)
Other than that we will need to refinish the pine floors in Bedrooms/living room/hallway and tile in kitchen and bathrooms plus laminate in basement room. As well as redoing the kitchen counters, resurfacing cabinets and newer appliances. And renovating bathrooms and finishing downstairs Bathroom, bedroom, egress window and, laundry room clean up/paint etc.
It will cost less because the general contractor is my step-dad and will let me do all the demo and I can install new windows myself as well as paint and do a few other things like frame basement bedroom/rough drywall etc.
Btw the vacancy rate in Grand Island, NE where I am buying this is just 3.0%
After all is said in done with both units rented out the number look like this:
NOI: $10,745
Cash Flow: $3,389
ROI: 50.71%
Cap Rate: 10.23%
Cash-on-Cash Return: 50.7%
Total ROI: 137% Plus a little bit due to tax deductions on lnterest from financing.
We are getting an FHA 203K mortgage for $105,000.
COST ASSUMPTIONS
Purchase Price: $75,000
Down Payment: $3,675
Improvements: $30,000
Closing Costs: $3,000
Total Costs= $108,000
Cash Outlay=$6,675
FINANCING ASSUMPTIONS
Downpayment: 3.5%
Finance Amount: $101,325
Down Payment Amt: $3,675
Interest Rate: 4.75%
Mtg. Term (years): 30
Mortgage Payment is $693.05
What does everyone think of this deal?