Please help me analyze this duplex deal

[Steven Hellinger]

I would appreciate your input on this deal.

I know it is not a home run, but I thought it was a good started property to invest in.

It is in a great neighborhood with great schools and the rent and tenants are very strong. I was planning to buy and hold. Some numbers to look at.

Duplex 2 units 3 bedrooms 1 Bath each

Great school and 1 block to train in a very nice neighborhood.

$210,000 Purchase Price plus closing costs 

$233,000 Appraises for 

We would borrow 75% which is 172,500 at 5.5% is $979/month

$32, 400 year rent $1350 month each unit very good rental history

$11,750 P&I year 

$7560 Real estate taxes and insurance (Taxes Yes very high in this area 6500)

$2700 vacancy  two months. 

$1200 Utilities on our end water and some of the gas heat in one unit

$500 Lawn and snow

$1620 Management fee  5% we will management the units we live about 2 miles away

$2000 Capex new roof, new heater, new hot water heater, new windows, newer appliances,

13% COC return

Please let me know your thoughts on this deal and if you would adjust any of the numbers.

[Steven Hellinger]

Thanks @Jay Helms for the analysis her are some answers to you thoughts.

I am being conservative on the vacancy not many rental properties in the area that are 3 bedrooms and they are always in high demand.

I can try and transition some of the utilities to the tenants. It is a very solid rent for the area and I already have the water figured into the rent at $50.00 per month per unit. I still pick up the gas for one unit that has baseboard heat and is not separate utilities. Both families in each unit have been there over a year and I am not sure if charging them for the additional utilities will fly. I can always test the market the leases are coming due in July, both tenants are great and pay on time I would hate to lose them.

All of the investors always tell me to put in a management fee even if I will self manage. I was going to keep that  extra money in my working capital account. I also wanted to figure in that number just incase someday I decide to not self manage, which I think is highly unlikely.

I know those taxes are crazy, if not for the taxes I think this deal would be a home run. Instead I got maybe a double.

Again thank you for your excellent suggestions.