Thoughts on Duplex I Am Considering

[Kenneth Picha]

Hi All

I wanted to get some thoughts on a Duplex I may be purchasing. 

FYI-This will be a purchase to begin my acquiring of properties in Madison.  The reason why is we are moving there after I retire from the military which is a year from now.  I will use a property management company until we move there.  I have single family home rentals now and I am moving to multi-family as part of my business plan.

Background:

- Economy:  Major college.  State Capitol area.  Growth is due to internet companies and insurance agencies moving in.

-Neighborhood: Okay.  I feel comfortable walking around day or night and so would my wife.  It is a clean neighborhood and taxes are reasonable.  Crime is dropping off and the neighborhood is considered up-and-coming.

- Maintenance:  Some.  They are both rental ready but my long term plan would be to increase the 1.5 bathroom to 2 full bathroom. 1 of the kitchens would need to be updated and the other is pretty good. The basement in one of them needs some updating but not much.  Roof probably needs to be updated in 5 years.  The HVAC and water heater are about 3-5 years old in both.  Garages and siding are okay and don't need work.  Yard is kept and does not need work.

- Tenants:  One side is occupied by a renter who has been there for 5-years and is on a month to month lease.  The other side is vacant and a renter is ready to move in however has not in case someone wants to live in this side.  Problem is that the current tenant is renting at $1100/month.

- Why Selling:  Seller wants to invest in a larger property and use a 1031.

- Income:  Based on the rental calculator utilizing a 6% rate for $205,000 on a 30-year loan.  Income could be about $350 a month after all expenses paid (

Vacancy, Management, Insurance, Taxes, Maintenance) I used an appreciation of 3% which is on the lower end for the area and a monthly rental total for $2400/month brought in by both units.

Any and all thoughts would be appreciated.

thanks Ken