Is This a Real Deal?

[Josh Gaddy]

Hello all,

I have just recently changed my mentality about real estate investments and have decided to look for all brick rental units. I think I might have found a deal but I am not sure if I am working out the numbers correctly. This is my first rental evaluation.

This is an all brick duplex, recently renovated, for sale at $65,000.
I think I can get 10% financing on an investment with 5% or $3250 down. The property taxes and insurance will estimate at $1500/yr. That would put me at roughly $7675/yr. in expenses. Thats $640/mo. I believe the property to rent for $425/unit/month. So its $990 in gross rental income.

Using the 50% rule, do i need to keep my expenses at $395/month? That would be $990/2=495 - 100 for cashflow is $395? Is this the correct calculation?

And using the 2% rule, these rents are only at 1.5%.

Therefore, I have 2 questions:

1. Did I do my rule calculations correctly?
2. What should I offer?

Any help is appreciated.

Thanks gurus. You guys have saved me from many bad investments! Hopefully I can stumble across a good one soon!