Bought my first Property! A Duplex in North Raleigh

[Keith N.]

HI All,

I just closed on my first deal about 4 days ago and I thought I would share the info with you and ask for your input on the deal.  The house I bought is a Duplex in Raleigh which I will be owner occupying in one side (with a roommate) and renting out the other side.

The Duplex is on a street with 14 SFH and 3 other Duplexes. It is part of an older neighborhood with about 250 SFH's and probably 5-10% duplexes. I would classify this area as a "B" area. Most neighbors are either people in there 50's and 60's or younger people with small kids. Low crime area.

Purchase/Repair Costs

Price $180,000

DP: $6,500

Inspection & Appraisal: $1300

Closing Costs: $500 (credit from lender)

Repair costs and Labor: $3,500

I Recieved a - $2000.00 credit from the seller for repair costs upon closing

.... So technically it cost me ~ $6000.00 - $6500.00 total to get into the house when the repair costs are factored in.

Mortgate Details

FHA with 3.5% down, 30 year mortgage

Total monthly payment (everything included): $1143.00

Home Info

1,110 sq/ft per side, 2,220 sq/ft total

Each side is a two story unit

Medium sized kitchen (All normal appliances will be included or installed)

2 upstairs bedrooms each side

1 full bath, 1 half bath each side

Covered concrete patio each side

storage shed

Seperate Driveways on each side of Duplex

Rent

Projected rent is $900 per side (I will have to pay for water, this will be included).

Rental side: $900

Roommate: $425

Total (While I live in one side): $1325.00

Total (When I move out): $1800.00

Cash Flow (Before maintenance/Vacancy): $1800.00 - $1143 = $657.00/month

I spent all weekend painting and arranging "contractors" to do all the work I don't want to do.  The numbers I was quoted at were right on the money as to what my projections were at, so the numbers we are looking at above should be pretty damn close.  I might end up spending $1000 - $1500 extra on unforseen up front maintenance, but there is no way the repairs will cost me more than $5000.00 total in a worst case scenario.

I realize that I probably paid over market value for this Duplex, but for my exact situation this was by far the best deal I had come across.  It is EXTREMELY difficult to find a Duplex in Raleigh that is not in a sketchy area and not completely falling apart.

Please let me know what you think of my first purchase!

- Keith

[Ben Leybovich]

@Keith N. - Congratulations!

You over-paid by about $40,000 - $50,000 for it to make sense as a CF investment. having said this, I think I have a feel for the type of area, and I don't think you'll loose equity, and likely appreciate over time. Further, the type of tenant you'll attract will not cause too many headaches nor economic losses. Finally, with you house-hacking this thing, it very well may have been the best you could do...

Good Luck with it, Keith. I think you'll be fine :)