Duplex Analysis - Cincinnati, OH: 2 property options

[Account Closed]

Hi BP! 

I'm a newbie looking to make my first purchase: a duplex. I'm planning to use Navy Federal Credit Union for financing with a 0% down VA Loan (my husband is Active Duty Navy) and house hack while working F/T. The analysis however does not include house hacking as I'm focused on what this will look like 12+ months from now when we move out. This is my first time posting an analysis, so please be gentle...all constructive critiques welcome of course!

Both duplex options are located in the "up and coming" Pleasant Ridge neighborhood in Cincinnati, OH.  Thoughts on my numbers/missing anything? Suggestions? Would you do either deal or should I keep looking??

I'm definitely still reading, listening, learning as much as I can everyday so if I totally goofed up something, please advise! Thanks!!

Option 1, 1/1 & 1/1

Mortgage Loan 84,000

Loan Interest 4.5%

Term 30 yrs

Potential Rental Income 12,600 (550 + 500)

Assumed Vacancy, 8% 1,008

Gross Operating Income 11,592

Property Taxes, Est. 2.5% 2,100

Insurance 450

Mgmt Fee, 8% 1,008

CapEx, 10% 1,260

Total Expenses 4,818

NOI 6,774

Annual Debt Service 5,229

CF Before Taxes 1,667

Monthly Income per unit, pre tax 69.44

Option 2, 2/1 & 1/1

Mortgage Loan 120,000

Loan Interest 4.5%

Term 30 yrs

Potential Rental Income 16,440 (745 + 625)

Assumed Vacancy, 8% 1,315

Gross Operating Income 15,125

Property Taxes, Est. 2.5% 3,000

Insurance 450

Mgmt Fee, 8% 1,315

CapEx, 10% 1,644

Total Expenses 6,409

NOI 8,716

Annual Debt Service 7,296

CF Before Taxes 1,419

Monthly Income per unit, pre tax 59.14

[William Walker]

Originally posted by @Ralph R.:

@William Walker  . You keep referring to risk. Can you explain what risk to the landlord is there when   the bank has financed 100% of it??  I'm not seeing that either.

The risk is that she has a major property repair, has a decline in the property value, or has any of the tenants that people post about on this site every day.  It's the same risk that is taken on with any investment property.  I don't understand how you don't think there is any risk with this or any property.  One of the things to make the reward worth the risk is to have the property cash flow.  By not being able to see any money out of the deal for a very long time while possibly having to sink money into the property is not what most first time investors would see as ideal. 

I can get a 100% financed property as well through the VA, but I'm not going to go grab just any property because someone else is financing it. If I had plenty of investment properties with positive cash flow, no limit on VA loan amounts, and didn't want any money out of the deal for 5-10 years it would be much more enticing. Most investors use funds from their first property to fund future deals. This investor wouldn't be able to do that and I think it would stunt their long term investment possibilities.

Again, I appreciate your post and the civil discussion.