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Updated over 9 years ago on . Most recent reply
First Property - Duplex in Tx Help on Numbers
Hello BP,
This is my first property to seriously analyze since looking for a duplex in the Houston area. I cant seem to get the numbers to work for me and am asking for your help.
I am analyzing these number as if both units were rented out, but i do plan to house hack for at least the first year.
FSBO
Asking: 199k
County appraised: 145k
estimated rents in the area: 1200 per unit
estimated property tax: 300 month
estimated property insurance: 120 month (very loose estimate)
estimated vacancy: 8% ($192 a month based on 120,000 purchase price. I used 120,000 because that is 80% of appraised value. i question this.)
Loan would be FHA with 3.5% down.
Based on 120,000 purchase
loan amount: 116,400 over 30 years
down payment 4,200
4.0% interest
P&I 555.71
using the 50% rule i come up with the following expenses:
50% of income: 1200
P&I: 555.71
Vacancy: 192
Insurance: 120
Property tax: 300
Total: 2367
This equals a cash flow of 32.29
Am i over compensating for expensive by not including vacancy, insurance, ect into my 50% rule amount?
How should the county appraised amount compare to the asking price? Other duplex's in the area reflect the same appraised amount.
Most Popular Reply

The 50% rule covers taxes, insurance, PM, vacancy, maint and repair, etc., so you are double accounting for some of those expenses, which is hurting your numbers. Also, vacancy is calculated as a percentage of the monthly rent, not the value of the home. So in this case, 8% of $1200 rent would be $96/month vacancy factor.
The 50% rule is a just a quick way to screen a property to see if it is worth a further look. If you know more precise numbers, it is much better to use those than lump them into the 50% rule. Hope that helps you.