20 Duplexes and 1 seven unit apartment complex

[John Hixon]

I have been presented with an opportunity to buy 20 duplexes and 1 seven unit apartment. The details are as follows.

20 duplexes - $1,300,000 – average rent is $700 / unit ($28,000 per month)

85% are 2/1. There is a one 3/1 and a 1/1

7 unit - $200,000 – average rent is $700 / unit ($4,900 per month)

All of these are 2/1.

10 of the duplexes where completely remolded in 2012 and the other 10 where remodeled in 2007. The remodel included new roofs, AC, hot water tanks, updates to electrical, ect… Not sure about the 7 unit complex yet as to when it was last remodeled. 

50% of the leases are one year and the other are month to month.

I stated earlier that the leases average $700 per month. On a majority of the leases the actual lease amount is $855 but the landlord pays a cap of $150 on electric.

Insurance is $900 per building per year.

Taxes are $670 per building per year.

Property management is probably going to be around 10%

They have a maintenance guy that lives in the one 1 bed 1 bath and from what I understand he takes care of the maintenance issues for the 20 duplexes and he has no plans to leave.

Something very interesting about these duplexes is they are basically across the street from a very large Army base. And, the base just announced an expansion including a lot of civilian jobs.

I know what I think about this deal but wanted to get everyone's opinion.

Let me know if I am missing anything.  Thanks.

[Robert Gandy]

@John Hixon, I like the deal. I see the opportunity to increase value by $700K to $800K by submetering the units. You eliminate the $150/month max utility charge. Even if you have to spend $100,000 (just throwing a number out), you have the potential of increased cash flow of up to $7,000/month. If you bring a plan and cost to do that when searching for financing, you can likely get that cost covered in the financing.