Should I buy this duplex? Based on the numbers.

[Christopher J Lemmon]

Purchase Price $82,725

Duplex, 2 bedroom, 1 bath each side, 4 Bedroom 2 bath total, with unfinished basements. All separate utilities paid by the tenants. The building is brick with just one story and the basement unfinished with washer and dryer hook ups.

Here are my costs.

Transaction costs:

Appraisal $450

Inspection $450

Title and Loans Costs $2000

Monthly Costs

Insurance $91

Taxes $125

Vacancy $213

Repairs $75

Cap Ex $125

Management $114

Mortgage $312 ($530 with escrow)

Total = $1055

Rents - It is currently leased through 2018

Unit #1 = $675

Unit #2 = $750

Total $1425

Cashflow

$1425 - 1055 = $370

Cap Rate

($370 + $312 Finance costs) / $82,725 = 9.8%

Down Payment 26% = $21,975

Cash to Close = $22,395 + 450 Appraisal + $450 Inspection = $23,295

We got a few credits from the sellers so this is the final cash to close after everything is figured.

Cash on Cash Return

$4,440 gross rent / 23,295 = 19%

The property is in Wyandotte County where duplexes go anywhere from $60,000 to $100,000 on average, depending on all the factors.

I feel good about the numbers. We had the property carefully inspected, so we have a good idea of what capital expenses we will need to be ready for down the road. We will have a furnace to replace soon. We got the list price dropped from 90K down to account for a few future repairs. Besides that, the units are updated with remodeled kitchens and bathrooms. The tenants are clean and they mow the property and generally take care of it. I already have a Fourplex 2 minutes from this duplex. I have been watching the market for two years for a deal while saving. I have been making offers for the last 5 months and was beat out by a few other investors several times. I took a 30 fixed deal at 4.625 with 25% down. It's a hefty downpayment for a new investor. But the property is rented and has been taken care of so I don't mind paying a little more for a property that is already performing. Anyone have feedback on my calculations? I think I did the math right for cap rate and cash on cash return.

I am interested what other investors might think.