Property Analysis

[Falak Patel]

Hello, I am new to real estate. Can you please advice if following property (duplex) is worth going after?

Purchase Price	$110,000.00
Rent/month	$ 1,250.00
Closing Cost	$ 1,870.00
Down Payment	$ 27,500.00
Mortgage/month	$ 412.00
Taxes/month	$ 120.00
Insurance/month	$ 80.00
Vacancy (7%)/month	$ 87.50
Repairs (5%)/month	$ 62.50
CapEx (7%)	$ 87.50
PM (10%)/month	$ 125.00
Lawn Care	$ 55.00
Expense Total	$ 617.50
Expense Total (%)	49.40%
Total Expense	$ 1,029.50
Net Cash Flow/Month	$ 220.50
Cash on Cash Return	9.01%
Cap Rate	6.90%
1% Rule	1.14%

[Ricardo R.]

Falak, it all looks good just one question, are there utilities you will be responsible for? or appliances you need to purchase? or renovations? --- It's really up to you and your area.... it really, really, really depends on the are. I personally like to see the COC Return above 12% and Cash flow about $80 higher... but again it really depends on your area. If you could either increase your rent to $1,400 (if you think you have that capability - $75/unit increase) you would be able to get @ 359 cash flow and @ 14.6 cash on cash return. Primarily I would try to get the price down as a first line though if you could get a rate below 4.375% and instead get a rate of 4.0% (if possible) and get the price down to 100K you would be looking at @ 274 cash flow and @ 12.2% cash on cash return ------------- BUT just remember it really is up to your area.... if that is the norm in your area and you comfortable with it, then sure, but again I would like to see your Cash on Cash return be closer to 12%.

I hope this helps. 

Alex