Help analyze first deal-Duplex

[Mike S]

We're looking at a duplex of 2/1s that are rented currently for $450 with 6 months left and $480 month to month. Overall the building is in great shape, with the only major maintenance issue that I can see is that the roof looks at least half way through its life.

It's listed for $49,500 but has been on the market over a year likely due to comps. (Not many duplexes selling above 35K in the West Price Hill area of Cincinnati.) The max we'll pay is $35,000. Financing will be 30% down ($10,500), 6% for 15 years with a payment of 206.74

Expenses monthly are:
-Taxes $115.66 currently
-Insurance $52.25
-Maintenance (10% of rent) $93
-Utilities ($50 per quarter, per unit for water and sanitation) $33.33
-Management (10% of rent) $93
-Vacancy (10% of rent) $93

Once I take my expenses and debt service from my gross rent, I'm left with $243.01 cash flow for a 27.77% COCR. If I understand correctly, my NOI is $5397 for a CAP rate of 15%.

Looking forward, I should be able to reduce the taxes to about $800 with a revaluation and market rent for 2/1s is about $550. These units are nicer than most in a little nicer area and they have AC, so I think higher rents might be justified.

Let me know what you think.

[Michael B.]

The numbers look good. However for your first deal, are you up to managing a cheap duplex in Price Hill?

Cash flowing deals are easier to find in tough areas, but it takes a special type of landlord to profit in such areas. Tests can come when you least expect them.

But I seem to recall that East PH was worse than WPH. But I could be out of date since I left Northern KY several years ago.