Please help me learn to analyze a property

[Account Closed]

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

[Bryan O.]

I would always anticipate some rehab. If you can get that property 16% below it's value then that means deferred maintenance. It may be as simple as some carpet and paint, but there will be things that need to be done or they would just sell it for market value. Having units rented doesn't mean that they are up to your standard.

Best of luck!