Would you buy this?

[Alex Johncock]

Hi guys,

I've got a potential deal that I can't make a decision on. Based purely on the numbers, would you buy this? Why or why not? Thanks in advance!

Here's the spreadsheet:

https://www.dropbox.com/s/xip0fk2p2v6rcoe/Woodward.xls

[Simon Campbell]

Your analysis looks good. Generally vacancy is factored in at 10%. The 50% rule does not include property management (which if you are mowing the lawn yourself etc you may want to self manage) so that should add another 10% to the total. Real estate taxes seem high but they will be adjusted based on the purchase price, so you may want to factor the millage rate to the purchase price.

Using the 50% rule + 10% for property management and the additional property taxes, my most conservative estimate indicates that you will have a NOI after mortgage but before taxes of $139. Too low for a duplex - target is $100 per door.

Erase the management fee and you jump to $269 with a cash on cash return of 26.9% if the purchase price is $60,000. But even at $65,000 the property is do-able. I would definately seriously consider this property.