My Duplex Deal... Please Analyze

[Tom Sylvester]

My partner and I are going to put an offer in on this duplex tomorrow, and just wanted to have some others look at it to make sure we analyzed it correctly.

The owner purchased the duplex 1/12 years ago as a foreclosure. One unit is 2br/1ba and the other is 1br/1ba. He inherited both tenants and they have been their the entire time he has owned it. Him and his wife just purchased land to build a house, so they need to sell so they can begin building. While he has owned the place he as put a new roof on (tear off, so it only has 1 layer), put new doors on and some other misc stuff. The water heater is new, and the furnace is older but my father (a contracor and also a landlord) inspected it and said it should last at least a few years.

He is asking $31,900. The rents for the two apartments are $450 and $550, so $1000 gross rents. The utilities are not split (so they are currently included in the rent), but once a tenant moves out we plan to split them and make the tenants pay them.

We plan to offer $25,000 and assume we can negotiate to $28,000.

Using Mike's 50% operating expenses, that leaves $500 for NOI. Subtract a mortgage payment of $266 (10 years @ 8%), that leaves $233 left, or $116 per unit.That is based on a 20% down payment and 5% closing costs, leaving an approximate ROI of 40% (based on $6986 out of pocket costs).

I have attached analysis sheet that I created for this. Please let me know if my numbers are accurate and if this look like a good deal.

Any ocmments are appreciated. Thanks!