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Updated over 7 years ago,

User Stats

10
Posts
2
Votes
Nick DiTommaso
  • Macomb, MI
2
Votes |
10
Posts

Running the numbers, Duplex has low Cash Flow

Nick DiTommaso
  • Macomb, MI
Posted

Looking a 2 decent duplex in a town near by. Good low crime and great school district, I am focused on this area as local restaurant chains are building in this location.  149K and 135K, Both 2/1 and 135K needs some updating.   

But after running the numbers, estimating the tenant to pay certain utilities, not including Garbage/Lawn, and having variable expenses of Vacancy/R&M/CapX is at 30% of rental income, conservatively high, cash flow does not look too profiting to me. 

Plan on Year 1 to occupy one unit and rent the second unit, but Year 2 I would be saving to move to a SFR. After mortgage calculating and estimating the rental rate judging from the rental rates in the area, I would only cash flow around $300. Is this reasonable?

With all the factors accounted form has anyone had similar outcomes? A mortgage would be around $1050 when putting 4% down and having a conservative rate and renting would be somewhere around $1000 for that area, maybe a little more depending on the condition of the duplex. 

I am a conservative person saving for those rainy days or big fixes so I could assume that's why I could be cash flowing low. Return on Cash comes out to 0.2. 

$300 in positive cash flow on Year 2 and the invested would be $10,000+$8,000=$18,000. $8,000 being the amount paid on mortgage Year 1. 

With all these factors, what could I do to better cash flow? Lower Mortgage payment, lowering expense, higher rent? Any advice or experience knowledge can help.

Thanks!

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