Newbie investor, Am I doing this right?

[David Vile]

Hi guys, first time posting here. My brother and I are looking into buying duplexes in the suburbs around Philadelphia and New Jersey since that is where we grew up and currently live. I found a few duplexes that I feel I've ran the numbers including maintenance, vacancy etc and these properties should generate ~$200-300 cash flow a month once fully rented out. We plan on getting a few properties and generate the cash flow and leave it until we have enough for another property. We'll be putting 15% down and using a conventional loan at 30yrs fixed. 

I found these through real estate agents and looking online. I feel like I'm missing something though, these properties have been sitting online for months according to the websites. Can anybody give me an idea on something I may be missing or over looking as these seem maybe a little too good to be true? I appreciate the input guys. 

[Andrew Johnson]

@David Vile I think your numbers are coming up nice because you’re using 5% instead of 8% for vacancy.  5% instead of 10% for cap-ex.  So while your rents are conservative your expenses are conservative as well.  Now that might be logical if you’re buying 2015 construction but not so much if it was built in the 1960s.  I’m assuming property taxes and in there somewhere but I didn’t see them.  Anyway, the net result is that you might be “shading” the expenses slightly slow.  It happens all of the time.  But if you change everything from 5% to 8% it will add up.

My suggestion is to stress test your deals but running multiple pro-formats with 5% categories vs. 8% vs. 10%.  At least know where that “breaking point” is in your analysis.