Newbie - bagged our 2nd duplex ;)

[Rob Gleason]

We just closed on our second duplex!  I wanted to wait a little longer to build up our cash reserves a little bit but this deal popped up: duplex built in 1978, 2 beds/1bath each side, fully rented, 5 minutes from our first duplex, retired out of town owner.  It was on the market for 3 or 4 months and the asking price dropped so I figured they were getting a little anxious.  Sent my inspector in and he came back with a laundry list of repairs which I had my agent forward to the owner along with a lowball offer of $40k cash.  He countered at $45k and we closed within a week.

Here's the break down: 

• Purchase price + closing - 46,400
• Immediate repairs            -     700
•                     Total cost.      47,100

Current rents ($450/side) =.   $900 month Expenses

• Insurance                            -  63
• Taxes                                   - 58
• Management.                      - n/a
• Maintenance.                       - 60
• Water/sewer.                        -60
• Mortgage.                            - 0
• HOA. - 0
• Vacancy 10%.                     - 90
• Repairs 10%.                      - 90

Total monthly expense              421 Cash flow.              $479 mo =  $5748 annual = 12% cap rate The plan is to defer other repairs/ updatesuntil current tenants move out.  Budget $4k per side and we're sure we could get $500 maybe $550 per side.  Section 8 in the area pays $725 for 2br/1ba so we're thinking about doing that.  Any thought on section 8 tenants?

[Paul Timmins]

@Rob Gleason 

Congrats.

You can call the local Sec 8 office ask their requirements ask to call some current landlords and see what their experience is.

Section 8 are more labor intensive go to IREM.org search for ARM certified property managers that handle section 8. Call 5 ask them ow they select and what issues come up.

Paul