<<Duplex For Sale>>

[Jeremy Sanders]

Hello Everybody,

Im currently looking at properties to Buy & Hold, and I ran into this deal and Im trying to see if it is a good one or not.

Asking Price: $139,999.00

Down Payment : $6,800.00

Monthly Payment: $ 885.00 Per month w/ a rent to buy option.

Using the 2% and 50% Rule this is what I get:

139,999.00 * 2% = $2,799.98

$2,799.98 * 50%= $559.99 (Expense) $559.99 (Mortgage)

Currently one unit has a tenant, and it brings $525.00 Per month. I don't have all backgrounds of the property such as (Bedrooms and Baths, Property Tax, Principle & Interest, Neighborhood, Transportation Availability, tenant screening, etc.)

From the advertisement it seems like the seller is trying to owner financing, if this is true does the Mortgage amount from the 50% rule still apply? Do I factor it away from the monthly payment the seller is asking for? Right now of course I'm not looking to jump into the deal headstrong, I just want to look at the numbers and then see if this property actually has potential for a Rental Property.

Here's The Ad:

"The purchase is 139,999 both units $6800 down this make your payment 885 per month good schools quite area safe and secure. Upper unit is 2 bedroom and bring in 525 per month. Duplex can be paid off free and clear 12 years. Then no rent just income. If you want to ................rent option to buy............... 885 with two month deposit. This is newly remodeled brand new carpet on ground floor with a large yard."

From the ad it has 5br/3bths, But I don't know how they are separated.

Please tell me what you all think.

-Thanks!!

Also, What are some other things that I should take into consideration?

[Blake C.]

I didn't see what the bottom unit rents for. If the top unit rents for $500-600, it's going to be challenging to get close to 2% of the asking price in total rents. I can't always get 2% deals here in Texas on nicer properties... I end up being okay with deals around 1.5% and can cash flow good with the 50% rule as well.