How is my Cash Flow Analysis? Good deal?

[Matthew Brenner]

Thanks for taking the time to read and comment!

We are looking into buying our first property, and we have $40k with which to begin our investing. My wife is very fiscally conservative, so she does not want to use up the full $40k and rely on our regular savings for reserves.

The property is a ~100 year old duplex in good condition in north central Massachusetts. It has newer windows and roof. It has a letter of lead abatement and is theoretically in overall good condition. The neighborhood is a C on an A-D scale - poor, but not especially crime ridden.

Asking cost: $69,000 (let's assume for now I cannot get them to budge on price)

Initial Investment: $17,475 (25%)

Rental income: $15,600 annual ($650 per month per unit)

Assumed Annual Costs: $12,076

• 10% vacancy - $1560
• $1900 Property Taxes (estimated increase from previous year's actual)
• $900 Insurance (this is really a guess)
• $1000 annual snow removal and "landscaping" (no yard)
• 5% repairs budget and 10% capex - $2808
• $720 water bill (estimated)
• $3188 mortgage (30 years @ 4.5%)

Cash Flow: $3,524

RoI: 20%

CAP Rate: 10%

Can you see any obvious errors in my planning? At what price would you purchase this property?

Thanks again for taking the time to read and review.