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Updated over 9 years ago,
Please help me learn to analyze a property
I am trying to learn how to analyze rental properties. Below are some numbers that I put together for a duplex I'm looking at. Built in 1987. Each unit is 2 bed, 1 bath, about 1000 sq ft. Both units are currently rented. As far as I know the property doesn't need any repairs. I would appreciate any help or advice. I'm not sure I am doing this correctly.
Purchase Price $126,000
ARV $150,000? I sent my broker a request for info on actual value
Zillow says $170,000 but that's too high
The county assessment is $94,800
Down Payment (20% of $126,000) $25,200
Closing Cost (2% of $100,800) $2,000
I’m guessing on the 2% closing costs, maybe it would be higher
Mortgage $100,800 for 30 years @ 5% $541 per month
I’m guessing on the 5% rate
Annual Mortgage Expense $6,492
$541 x 12 months
Gross Annual Income $16,800
2 units @ $700 ea per month
$1,400 x 12 months
Taxes $1,855
Property Management Fee $1,008
2 units @ 6%, $42 ea per month
$84 x 12 months
This doesn’t include a placement fee
Insurance $700
Lawncare $960
2 cuts per month @ $40 ea
$80 x 12 months
I assume that lawncare will be the owner’s responsibility for a multi-family
Vacancy Rate (8% of $16,800) $1,344
$16,800 x 8%
about 1 month per year, per unit
Maintenance and Repairs (5% of $16,800) $840
This percentage is subject to change after I inspect a property
and see the age and condition of things
CAPEX (5% of $16,800) $840
This percentage is subject to change after I inspect a property
and see the age and condition of things
Annual Cash Flow $2761
$16,800 Rental Income
- $6,492 Mortgage Payments
- $1855 Taxes
- $1008 Property Management
- $700 Insurance
- $960 Lawn Care
- $1344 Vacancy
- $840 Maintenance and Repeairs
- $840 CAPEX