Input needed on a duplex in Stockton CA

[Rahul Singh]

Hello Everyone,

I need everyone's input on a deal that I'm in the process of making.  Here are details:

• Specs: Duplex built in 1976, each unit with 3 bedrooms and 2 bathroom
• Purchase price / financing: $199,000 with 20% down
• Rented: Both units are rented at $950/unit/month = $1900/month
• P&I:  $770 
• Insurance: $75
• Property taxes: $199
• Maintenance, repairs, reserves: 15% of total rent = $285
• Utilities: $0
• Property Management: $0 I will do it myself 
• Vacancy: 10% of total rent = $190
• Cash flow:
  • 1900-770-75-199-285-190= $381
• Tenants are section 8 with roughly 60-40 split between housing authority and tenant (40%)

There are couple of minor issues with the property which would need about $2000 of work but not currently required.  Only because I would like to see my property in a little better shape.

Does this sound like a good deal?  What concerns would you have?  Is it difficult to deal with section 8 tenants then normal?  Are there any pitfalls or things that I'm not accounting for in my assumptions above?

Please note anything else you feel may be helpful to us.  Your input is much appreciated.  Thank you much.

[Kyle J.]

@Rahul SinghThat's not a bad return for this area right now.  You don't give the exact address, but I'm assuming it's maybe in the Fox Creek area which is close to Morada (as opposed to Madera which no part of Stockton is close to).  If so, the Fox Creek area isn't the best, but it isn't the worst either.  Fortunately the rental market in Stockton is very strong right now, so you should have a fair amount of applicants to choose from.  I just finished a remodel and rent-up of one of my North Stockton properties last week, and I had a TON of calls and applicants on it starting about an hour after I placed my ad.  I ended up finding a tenant after only one day on the market and had it leased and money collected by the next.  One of the applicants told me that they had been looking for 3 months and either they didn't find anything nice enough or they were losing out to other applicants because of all the people out there looking right now.  So it's a good market for landlords right now.  Best of luck to you.