Duplex in Lebanon, NH

[Drew MacDermott]

Good afternoon, fellow BP'ers!

My wife and I have lived in the area for a year now and I have interested in purchasing property due to two factors - 1) Dartmouth College next town over and 2) Dartmouth Medical Center just up the road, both supplying a high number of tenants. I have been watching the MLS and found one duplex that was listed at $200k several months ago and just came back on the market at $175k. I am not ready to put in an offer and have not confirmed the numbers yet, but here is what I have calculated for practice. The biggest issue I see in NH are the high property taxes - I'll have to offer much less than asking price.

Property is in good condition and would probably need $5k in cosmetic repairs.  I would love to hear your thoughts on the potential that this property has.  

Total Current Monthly Rent $2,400

Purchase Price: $140,000

Down Pmt: $28,000 (20%)

Closing/Holding Costs: $3,000

Morgage Pmt: $550 (4%, 30 yrs)

Taxes/Insurance: $625

Prop Mgmt: $240 (10%)

Repairs/Maintenance: $240 (10%)

Vacancy: $240 (10%)

CapEx: $168 (7%)

Water/Sewer: $83

Lawn/Snow: $42 ($500/yr)

Electric is subdivided. $0

Oil possibly one heater.  Current expenses are $7k per year, seems very high.

Current Cash Flow: -$371

I've done some research and it looks as though to install two separate propane heating systems is about $10k.  I could upgrade the units to a Rannai system in order to remove the current $7k oil costs.

Cash Flow with Tenants paying heat: $212

[Expenses per MLS Listing (Assuming annual)

Insurance: $2,033

Heat: $6,912

Water: $980

Snow Expense:350

Maintenance:1,650]