Evaluating a duplex in a college town

[Steve S.]

Should this be avoided due to the obvious liability issues?

I have a line on a duplex for that rents for about $3,200 in gross rents. If i assume insurance runs about $3,000 / year and assume the 50% rule based on a 30 year note with 25% down at 4.8%, i'd have to get annual expenses to be around $10,000 / year (including the other expenses that would get me to 50% for the rule of thumb).

Those expenses seem high for a property that is < 10 years old, but given it's a college property, maybe that's more reasonable. At that price point, it's not worth it. If it's half that, it may be a bit of a gem.

so questions:

1) would you avoid it due to the clientele?

2) what is a reasonable expense ration to assume on a college rental at the upper end of the payment scale?