Investment property in North Dallas

[Amar Karande]

I am looking at a duplex investment property in North Dallas (Sachse area), close to George Bush Turnpike. The asking price is $112500, monthly rent is $1025/mo (1% of the purchase price), the Cost/rent factor is 9.1. It is also priced in line with the comps. The property is recently updated, so the rent is priced well. I plan to use a property manager and this property manager has been managing this property for another investor for a while. It has been very easy to rent out in the past and he has been able to increase the rent consistently over the past few years.

My numbers show a cash on cash return of 1.03%, which sounds really low. This includes the leasing commission (1 month rent), Repair fees (Home warranty cost + 2 claims), Rehab fee ($500/yr) and 15 day vacancy reserve. My property manager/realtor believes this is the best I am going to get in the market. He ran the numbers without the above mentioned fees and he gets a cash on cash ROI of 9.69%.

I need some guidance in evaluating the deal. This property is 25 years old and I don't mind holding it for another 20-30 years. If I consider a 2% appreciation, 3% increase in property taxes, 2% increase in rent/repair costs/insurance, I am looking around 7-8% return on selling the property in 30 years (see screenshot/attachment). I want some guidance to ensure if I am analyzing this correctly. Also, do you think it is a good deal or a bad one? Looking forward for any suggestions. Below is a link for google sheets which has all the calculations. In case you are unable to open the document, I also have some screenshots included

Detailed Calculation Sheet

Thanks,

Amar

https://drive.google.com/open?id=1ZVDvGxZ1MeCW3tCj...