Brick Duplex Analysis

[Kathia L.]

Hi BPers, 

So this is one of the many possible REI I'm pouring over before finding my 1st deal and taking the plunge. I'm having a little trouble coming up with an offer Price. I'd like to get some feedback on my numbers and if you think this is a good deal cashflow or equity or both and why. Also is it my calculations or is there a big discrepancy between the 50% rule numbers and the 4-square? I haven't asked for any detailed info yet, just want to see if it could be a decent deal. Thanks

Brick Duplex Chicago Area (B,C neighborhood) 2 blocks away from a sketchy possible war-zone on Austin Ave

Est property value $254,280 (from property tax website)

Taxes from 2015 $8223.94 (OUCH!)

Asking Price  $419,000 

Unit 1 3bd rent  $2,200

Unit 2 2 bd rent $1,500

Total Cash Flow $3,700

50% Rule

Its recently remodeled in good condition outside, decent curb appeal, nothing fancy, new appliances stainless steel, both units leased and occupied. I haven’t asked fo detailed info yet cause I’m still getting the hang of analyzing deals. So by 50% rule with this asking price.

$3,700 = $1,850 left after estimated NOI

30 fixed mortgage at 4.09% and 20% down:

$419,000 - $83,800 = $335,200

Monthly Payments of $1855

$1,850 - $ 1,855 = -$5 Net Cashflow 

Using Brandon’s 4-Square Method

Income		Cash Flow
Rental Income	$3,700.00	Income - Expenses
Laundry	$0.00	Total Cash Flow	$595.00
Parking	$0.00
Pets	$0.00
Storage	$0.00
Total Income	$3,700.00
Expenses		CoC ROI
HOA	$0.00	Down Payment	$83,800.00
Lawn/Snow	$140.00	Closing Costs	$3,000.00
Vacancy 5%	$185.00	Est. Rehab Budget	$1,000.00
Repairs 5%	$185.00	Misc/Other	$0.00
Cap Ex 10%	$370.00	Total Investment	$87,800.00
Prop Mng 10%	$370.00	Annual Cashflow	$7,140.00
Mortgage	$1,855.00	Cash on Cash ROI	8.13%
Total Expenses	$3,105.00