Analysis on a duplex

[Justin Fraser]

Hi everyone, I believe I'm going to put an offer on this property, and would welcome any feedback you have on it. I've included as many details as I can below. Thanks!

About the property: Duplex- both units are 2bdr/1bath, in a desirable school district. Both tenants have young children, and live here because of the schools. The tenant in unit 1 mows the lawn and shovels the snow in exchange for reduced rent of $100/month. Current rents are on the low side of average for the area.

The plan: There are some key issues I’d take care of right away such as adding doorknobs to the interior doors (they currently push a steak knife through the hole where the knob used to be), and some other mostly cosmetic issues (I hope- I’ll have a full inspection contingency in the offer). I’m expecting $3,000 in general repairs upon purchase.

Asking Price: $139,000

My realtor’s estimate on the price they will accept: $130,000

Offer: $124,000 with $4,000 back at closing

The following numbers are based on a $130,000 purchase price with $4,000 back at closing, even though I'm offering $124k.

Down Payment: $32,500

Closing Costs: $1,000

Cash due at closing: $33,500

Loan Amount: $97,500

Rate: 4.625%

Mortgage Payment: $501.29

Rent: $2,150/month

Expense estimate: $1,290 (60%)

Itemized Expenses/month: $1,186.50 (55%)

-Taxes: $462.50

-Insurance: $50

-Vacancy: $215

-General Maintenance and Repairs: $250

-Utilities (water): $117

-Accounting/legal: $42

-Miscellaneous: $50

Monthly Income: $2,150

Monthly Expenses: $1,290

Mortgage: $501.29

Cash Flow: $358.71/month or $4,304/year

Cash Investment: 36,500

ROI: 11.79%