Duplex rental deal analysis

[Yoann Mamy Randriamihaja]

Hi All,

My wife and I are looking to get started in real estate investment. To do so, we plan on buying a duplex, rehab it (my wife has 5 years of rehab experience from France) and either sell it directly for a profit or move in one unit and rent the other one.

Each unit could rent for $700 per month.

I'm using J. Scott spreadsheet to analyze the deal (which is great, thanks a lot!).

We are currently renting for $1400 per month. My question is: when analyzing this kind of deal, and assuming that we will move in, should I account for the money that I'm saving because my rent would be lower?

The NOI is close to $6000 per year but due to mortgage servicing, I get a negative cash flow of $3000 per year, while doing this deal helps me save $8400 per year in rent that I can then re-invest.

It makes sense to us on the long run (renting one unit helps pay the mortgage), but how to be sure that this is a good deal and that we are not spending too much in purchase/rehab? It's giving us a negative cash flow of $125 per door, while I keep reading that we should target +$100 per door.

Thanks for your help!

Yoann