Duplex with solid cash flow

[Jay Mitiguy]

Hey BP,

I'm looking at a duplex about 30 minutes outside of my hometown and right now, it seems too good to be true. This would be my first investment property & I was hoping to get some feedback on the numbers to see if I'm overlooking something, or underestimating the amount of time and work that goes into tenant management. So here we go:

• It's 1800+ sqft
• each unit is 2 br 1 ba
• it's section 8 approved and both tenants are currently utilizing vouchers
• Asking price is $115,000, but I'm going to offer $80,000 to start the negotiation and will settle on anything up to $100,000
• Rent is $920/unit ($1,840 total)
  • Of that, 80% is subsidized by S8
• Taxes were $2,775 last year
• Operating expenses are $2,100/year
• Total annual expenses including taxes were $4875
  • This number excludes debt service as the current owner carries no mortgage on it

Given those numbers, the old owner had an NOI of roughly $17,000. Including debt service and a larger increase an monthly maintenance, I'm looking to cash flow about $375/month. I'm planning on using a HELOC for my down payment and financing the remaining 80%.

So am I crazy for not jumping on this sooner?

Thanks for any input,

Jay

[Jay Mitiguy]

Here is a couple snap shots of the cash flow calculations I've done. I made a couple tweaks to it since I ran my numbers listed above.