Duplex Analysis

[Eric Blackford]

Hey everyone! I am new to REI and new to this awesome BP Nation, but I am absorbing everything like a sponge I hope! I am a well-seasoned equities investor, so that background makes the finance and numbers learning come easy. I modeled my excel spreadsheet after the analysis sticky on this forum… thanks Dorkins!

OK here we go

This property (among 5 others) could be my first purchase and I would like BP Nation’s wise opinions.

Town’s population is ~20k. This duplex is in a working class neighborhood. It is definitely not a junky ghetto, but not middle class either.

I haven’t gone in the duplex, but I have had some conversation with the owner. I will go in the duplex this week.

Below the spreadsheet are explanations for some of my assumptions. Please check those out while you scrutinize the numbers.

Rent per unit – Fair for the neighborhood. Both units are 3+1. The tenants also just redid their 1 year lease 1 month ago so I can’t raise if I wanted to.

Vacancy – assumed 12% but this town has renters beating doors down to get in places

Management/mowing – I will be managing the property, so this is really just a mowing estimate

Maintenance and repairs – est. this place has some nice stuff in it like almost all hardwood floors, some vinyl.

Utilities – water estimate. I believe this is all the owner pays, but I will verify this week.

Closing costs – estimated 2% of house value

Repairs – only estimated because I haven’t been in them. New roof in 2009 so after this week I may be able to write this one off as $0.

I don't really like the CoC and the cap rate right now. I think I would like to see at least 20%/12% CoC/Cap but I'm not sure. That would put my offer just below 60k I believe. What's your opinion on these figures?

BP Nation, am I going the correct path on this analysis, or am I way off track?

I am very willing to learn, so criticize away!