Deal or No Deal....duplex...???

[James Mudd]

Duplex - 3/2 and 3/2.5

Bldg SqFt: 2,610

LP: $155,000

Rents: $ 950 per side

Cap rate: 12.26% (according to MLS listing)

Gross Multiplier: 6.80

Insurance: $1,000

I will occupy one side...rent the other.

3.5% down for 30 year term (I will pay off much sooner of course)

What do you'll think about this deal..?

Thanks

[Robert Leonard]

@James Mudd Using simple rule of thumb analysis, tells you the cap rate would be closer to 7.35% with both sides rented.

2 x $950 = 1900/month x 12 = 22,800 Gross Rents / a reasonable expectation of expenses of 50% = 11,400/155k = 7.35% Cap Rate

You will get the accurate numbers if you follow @Mehran Kamari's advice, but that cap rate is way over optimistic.

It doesn't sound like a bad deal. If I had a 30 year loan at today's rates on this property and I wanted to make more investments, I would not pay a dime of it back early. You will end up borrowing higher interest money for future investments if your cash is converted to equity in this property. But I guess that's another conversation. :-)