All Forum Posts by: Mitch B.

-- As I think I stated in the post, expenses include:

( Ins + Property Tax +Maint & 95% occupancy rate)

-- $2425 is gross monthly rent

-- The $35K is my estimate to redo bathrooms, kitchen , paint & retape split corners & paint outside as it is still in it's original decor from 1968 when it was built. This is for the larger of the 2 units.

-- Property values have fluctuated +/- $10K over the last 10 years. Established neighborhood, good school system. Don't predict any appreciation.

-- I don't believe my buying out the siblings raises the cost basis since, as I understand, the house stays in the same taxation position as the person who is "gifting" the duplex. But I hope I am wrong. The $35K would indeed increase the cost basis.

-- I believe the rent demand is healthy, however, my guess is the current owner has kept the property occupied by keeping rent well below market. My guess is I will be able to add $150 to the rent on the renovated side.

That paint a better picture?

Thanks,

I've got a generous older family member that wants to step away from a 100% owned 30 yr old duplex & deed it over to myself & my 2 siblings. I'm trying to determine whether to sell it & invest my third in an index fund or buying my siblings out & becoming a landlord .

I running a 10 year model here.

Approx value is $200K

Annual rent from both sides combined, brings in $15,200 net, annually after all expenses ( Ins/Property Tax/Maint/95% occupancy rate)

Ok - here are the factors if I buy my siblings out:

- Do I use cash? If so I lose 9% earning power of that same $ in an index fund.

- If I get a loan ( which will be tricky since there is no mortgage, or at least a loan where I can deduct interest), the cost of $ is kinda steep on a $135K note

- Duplex is fully depreciated so recapture tax will be steep when I eventually sell it.( I would inherit the same tax position of my generous family member ) Also means I wouldn't be able to take any depreciation.

- Duplex will need $35K (approx & is a cash layout) for rehab.

When I run the numbers over 10 years it seems i would be barely ahead to keep the duplex vs. investing my cash outlay over 10 years at 9% in an index fund. This seems weird since I am getting 33% of the property for free.

My concern is my spreadsheet is missing factors. Is there a standard/favorite app/spreadsheet/site that compares investing your cash into rental property vs. stock market at an assumed rate of return?

Many thanks,

MB