All Forum Posts by: Jeff G.

Expounding a bit on cap ex, here's a ballpark of what I'd expect to pay for a ~2000 sqft duplex in a C/D area of California's central valley:

Roof:  $8,000 every 20 years....$33/month

Paint (exterior):  $2,500 every 10 years....$21/month

Carpet/flooring:  $3,000 every 7 years....$36/month

Replace HVAC:  $10,000 every 15 years....$56/month

Appliances:  $3,000 every 10 years....$25/month

Water heaters:  $1,200 every 10 years....$10/month

That's $181/month and I'm sure I'm missing stuff (like painting interior every turnover).  Call it $200.  

Add $100/month to the expenses for repairs and subtract $100/month from the gross rent for vacancies, and you'd be expecting $0/month cash flow (in CA's central valley), but essentially getting ~$6,500 paid down on your principal every year -- a 10% return on your $65,000 cash investment.  

Pretty decent return in today's low yeild environment...  Plus you probably will get to claim roughly $7,000 depreciation on your taxes (~$2,000 tax benefit at a 30% tax rate) for a property that will, on average, actually maintain its value with inflation.

So like you said, not a cash cow, but probably still a good deal especially if you can raise the rent without losing that long term tenant.