Analyze Duplex Deal

[Matt Maluchnik]

Can someone please analyze this deal and let me know if it looks like I'm doing this correctly.  I've made a few offers doing math similar to this and still no deals, so I just want to check in and make sure I'm not being overly cautious.  Thank you!

-=DUPLEX=- (both sides currently rented)

Side 1: $450/mo

Side 2: $450/mo

Owner Pays: $938/yr for Water

**Financials For Broken down for YEARLY**

-=INCOME=-

Gross Income: $10,800/yr (2% growth rate)

Vacancy: 3%

-=OPERATING EXPENSES=-

Advertising: $100/yr (2% growth rate)

Insurance: $750/yr (2% grown rate)

Lawn/Snow: $300/yr (2% growth rate)

Legal: $100/yr (2% growth rate)

Property Management: 10% of Gross Operating Income (factor's in vacancy %)

Repairs and Maintenance: 10% of Gross Operating Income (factor's in vacancy %)

Funded Reserves for CapEx: 10% of Gross Operating Income (factor's in vacancy %)

Taxes: $1,312/yr (2% growth rate)

Water: $940/yr (2% growth rate)

-=Financing=-

20% down, $3,000 closing Costs, 30 yr. Mortgage at 5.125% (recent quote by bank), put about $3,000 into the property year one for mixups.

-=Future Selling Price=-

Calculated based on 8% Cap rate, starts at $60,600 and goes up every year based on above financials.

-=Taxes=-

Depreciable Amount is 75%, also using 27.5-Year Straight Line depreciation

-=Spreadsheet Results=-

BUY PRICE: $48,666

CASH INVESTMENT: $15,683 (includes down payment and initial fixups)

Cash On Cash Return (Cash Flow Before Taxes/Initial Investment) -- starts out at 8% and goes up from there every year until about year 10 at 13%.

Modified Internal Rate of Return, After Tax -- starts out at around 17.9%..then goes down to about 12.83% in year 10 if I resell it.

NOTE: This is for a Duplex, so resell value on these I'm basing off of Cap Rates for the area.  When doing Single Family Homes I've been using Appreciation Rates of 1%.  I'm having difficulty figuring appreciation rates because I'll see values of -.98% over past 10 years...but past 2-5 years will give me rates of 2-3%.  So just to be safe I'm using Yearly Appreciation of 1%.

GOALS: I'm trying to get Cash On Cash Returns of 8% minimum year one..and looking for a MIRR of at least 10% in year 10.  Are those good numbers?