Please Analyze This Duplex

[Zach Davis]

I've come across a duplex in my area that is for sale for $125k. Both sides are 2 bedroom, 1 bath and approx. 780 square feet. It is a bank owned property and the bank is only accepting cash offers. My contractor and I have estimated that it will need approximately $20k-25k worth of repairs, mostly consisting of flooring, paint, and cabinetry as well as a few windows and doors and exterior paint. Much of the work will be done by me so labor costs will be low. It's slated to take 1 month. That will put me somewhere in the neighborhood of $150k total investment and the ARV will be $200k. Market rents on the finished units are $875-$925 per month. Yearly utilities are approx. $3000, insurance is $500, the vacancy rate for the area is around 6%, and property taxes are $2900.

The idea is that I could buy the property and rehab it for $150k, then finance it at $150k with a standard investment mortgage, pull my initial investment out and have a moderately cash flowing property with no money invested on a long term basis. I do have another duplex in the general area so I know the listed operating expenses are pretty close. Any input you have would be greatly appreciated.