Need some help - Duplex in Dearborn, Michigan

[Erik R.]

Hello All,

I'm in process of analyzing my first potential duplex deal and I'd appreciate some input. I've analyzed plenty of SFH deals but need some help with my assumptions on a duplex.

Property is in Dearborn, MI - a good midwest rental market, on a C+ / B- area.

Duplex has a 2Br, 1Ba bottom unit with a finished basement.. and the top unit is a 2Br, 1 Ba. 

List price is $140K. 

Rental comps for 2BR units in the area are $965/mo.

Assuming I purchase the property for $135K, invest $10k in improvements, utilize a 25% down/30 yr mortgage, and achieve 80% of the total market rents (from rentometer) + 7% vacancy/attrition, this property looks to cashflow approx $400/mo with a 9% CoC return and 12.5% total ROI.

My questions are the following, not having much experience in analyzing duplex deals:

- How would I accurately estimate rental income in my area for a duplex, if my area is mainly SFHs ? In my analysis I'm assuming 80% of rentometer area SFH comps, since I assume the average renter would rather pay less to stay in a duplex vs a SFH.. also, do I need to assume a higher annual vacancy rate for a duplex (my analysis currently assumes 7%) ?

-Not sure of the overall 'market' for duplex renters vs SFH.. this area is a suburban, working class neighborhood not within walking distance to a proper downtown.. thus do I need to be concerned that I won't find qualified renters (probably hard for someone not knowledgeable of the area to answer, but nonetheless is a concern).

- I'm struggling to accurately assess the ARV, as there are not many comps available for assessment. The most recent sold duplex's in this area were in Jan and Feb of 2017, and were for $80K (and half the $/sq ft.. ). The only way I've figured to estimate, is to take the approx market appreciation % from Jan 2017 to now, apply to these comps, and compare. Any other advice?

I'd like to make an offer, but want to verify my assumptions. 

If anyone has experience being in the MF game in my area, with similar challenges or advice on how to verify my duplex's analysis assumptions, please be in touch I'd love to connect.

thanks!

Erik