Duplex in New Brunswick, NJ

[Chris Townley]

Hi All,

I'm analyzing a deal for an off-market two family, and was hoping to get some other opinions.

Here are the numbers:

Asking Price: $324,000

Gross Monthly Income: $2500

Operating Expenses: $1467 (Insurance: $100; Taxes: $566; Water: $100; Vacancy: $125; Repair: $200; CapEx: $200; Management: $175)

With 25% down and a 5% mortgage, the property has negative cashflow at the asking price (-271).

I have to lower the offer price to $200k with the mortgage to get a monthly cashflow of $228, which is still pretty tight IMO.

Are people in this market just buying all cash? Without a mortgage at $324k purchase price it cashflows $1033/mo, but the cash-on-cash ROI is only 3.7%, so I can't imaging people are doing this.

Is the seller just asking too much, or am I missing something?