In need of advice about running the numbers on potential deals.

[Eugene Harris]

Hello everyone, just recently I have been playing around with numbers to get comfortable with analyzing deals before I jump into the real estate investing game. God willing, I'm going to buy my first property within the next few months by using a FHA loan. I found a few duplexes but again, these are just to test out numbers and see what mistakes I'm making so that I can fix them and improve my analyzing skills. Please give some advice on what I'm doing wrong or right, I would really appreciate it.

Practice #1

Duplex

-Purchase Price- $150,000

-Closing Cost- $5,000 (I always use 5,000 in my examples just to be safe.)

-Estimated Repair Cost- $30,000

-Total Amount (excluding closing)- $155,000

-Down payment- $5,250 (FHA 3.5%)

-Interest on loan- 5%

Monthly Income

$2,500 (That’s what is currently being charged to tenant)

Monthly Expenses

P&I- $1,379

Vancancy Rate (10%)- $250

Repairs (10%)- $250

CapEX (5%)- $125

Property Management( 10%)- $250 (Not sure if I need to include this because I will be living there on the other side)

Insurance- $200 (Not sure how to know the exact number for insurance so this number isn’t accurate. Too much or not enough?)

Total: $2,454

Total Monthly Profit- $46

In this particular duplex I’m running numbers on are both 3 bed room 2 bath on each side. I’m 22 years old with no wife or kids so I would have two extra bedrooms I will most likely rent out to friends for maybe $250-$300 a room which can boost my monthly profit up to approx $646.

Cash on Cash- 5.39% (I did $46 (monthly income) x 12 then divided that by $10,250 which is down payment and closing cost and ended up with 0.05385) correct?

As you can see I'm a bit stuck on how to find the exact number for insurance. I have been trying and trying to find a way to get the exact number or at least closest to it but I'm still having a hard time but I'm still researching the best ways to do so at the moment. For the mortgage and taxes I use an online calculator that fins the PITI.

Are there any other factors I have to add in that will be charged to me down the road? Also how would you calculate garbage, water, etc. if I were to add it to my analysis?

Please review my analysis and let me know if I’m missing anything that I should be calculating or if my numbers are way off on any of the costs. Thank you in advance! I know I need to keep practicing but I don’t want to practice over and over with the wrong technique so its best if I correct it now and continue to practice the correct way in the future.