I found another duplex I want to buy, but WTF?!

[Brian Zitzow]

So I found a duplex in a desirable neighborhood in my area and I want to run the numbers by you guys.

Asking Price: 350k
Gross Rent: 2000

I can do owner occupied financing with 3.5% downpayment and I'm assuming a 4% interest rate on a 30 year fixed. Property taxes in California are 1% of assessed value, and this property was previously assessed at 347k.

If I offer 200k on it, it's WAY negative. I can offer 95k on the property to get it to cash flow $100 per unit net income. Are my numbers WAY off or WTF? Who the hell is going to buy this thing???????????????

Can I get a sanity check on my expenses?

At 95k it pencils out:

At 200k (150k below asking price) I'm -$295.94 a month NET cash flow:

I am using general estimates for my CAP EX costs. I realize this could be off, but even if I didn't account for CAP EX at all I couldn't make it positive cash flow at 200k purchase price

[Radhika M.]

@Brian Zitzow

Are the rents market rate or they they below? Can you increase the rent. You need to know your market to make things work. Don't use general Vacancy rate of 10% and Property management of 10%.   What is the area's local Vacancy rate? I am not familiar with Roseville but in San Jose where I am the Vacancy rates are much lower 2% or 3%. I I assume 5%  to be conservative. The property management is lower than 10% in San Jose. It is around 6%  so find out what it is in your area. 

Don't make assumptions. Like Bob said above you need to see how the area appreciates and also the rent growth in the area.  

In the end even after you look all these the property may not work out but  you get a more realistic idea to move forward.