Detroit Suburb Duplex Analysis

[John Nelson]

This would be our first house. Listed for 130K. Owner has records of renting the upper for 600 and the lower unit for 1000, making the total monthly income 1600/month. Neither unit is currently rented. We walked around the place last week and it's in decent shape, but outdated. Built in the 50's.

If expenses are 800/month, that leaves 800 for debt service. We're doing FHA financing with 3.5% down, so at 4.5% interest, P&I = $635.

800 - 635 = $165/month profit.

Did I do this analysis right? Am I using the 50% rule correctly? If we could get the property for closer to 115K, profit would be $240/month.

This seems like a good deal to me, but it's been on the market for a while. I am wondering why another investor hasn't already bought the place. What do you guys think?