2 Family Rental Analysis

[Michael Lebeau]

Looking for that 2nd investment property. Came across a 2 family that needs quite a bit of work but I'm in love with the location.

Here my analysis put together... would like some opinions, or advice if I'm missing something

Purchase Price - $50k

Repairs - $40k

Monthly Mortgage Payment w/interest - $260

Property Taxes - $290

Insurance - $150

Heat - $200 (currently setup to share heat off of one boiler, so would have to include heat in rent)

Maintenance - $100

Monthly expenses - $1,000

Rental Income

Unit 1 - $600

Unit 2 - $800

Monthly income - $1,400

Thanks ahead of time for the advice!

[Mehran K.]

I'd like to use the 50% rule to evaluate this. Do the tenants pay for water/trash? What about Lawn Care/snow removal? That adds to the expenses just like the heat bill does.

Although I don't feel like getting a 4% 30 year loan is a possibility right now, we'll use that number.

$1400 * 50% = $700 - $200(heat bill) - $430 (Debt service ) = $70

$70 / 2 Units = $35 each unit.

That would be not factoring in water/trash/lawn/snow.

Again, this is just a quick run through. I'd say at that price, the deal is too slim for me to keep as a rental. If you didn't have to pay the heat bill, that would be a different story!