Duplex Due Dilligence in TX

[Tony Karns]

I am looking to buy a duplex in NE TX area in the next few months, due to work relocation. I would like to live almost rent free. I have done some of the preliminaries on this property, but it appears to me that I would still be in the red . I am not sure what I am doing wrong and would like to get some advice and also have a second set of eyes on the numbers. I am also using a VA Home Loan. Is there stuff that I am missing?

Deal Analysis

Duplex 4bed/2ba

Sqft 1792 each side

Current rent $1,142.00

Market Rent 1700-1900

Projected Collected Rent (both sides) $3,400.00 -3900

The Mortgage $1,613.00

Mortgage insurance (PMI or MIP) n/a

Property Taxes $371.42

Property Hazard Insurance n/a

Initial Investment $0.00 $ 50,000.00

General Maintenance Upkeep ?

Landscaping $30.00

Water 100

Repairs $170.00 or 5%

New Appliances n/a

Capital Expenditures $340.00 or 10%

City Taxes n/a

Property Management $170.00 or 5%

Vacancy Rate $272.00 or 8%

Total Expenditures $2,936.42

Difference $463.58

[Bart H.]

Originally posted by @Tony Karns:

asking $360000. Most rentals with very basic amenities are going for $1 /per sqft. The updated ones $1.10 - $1.26. I plan to negotiate the price down a bit , but I don't feel like I understand the current spreadsheets that I have at my disposal.

 I think you will have difficulty finding a duplex for $360K that will rent out at 1,900/side.

In mid 2016 we sold a duplex for $377.5K in a very trendy part of Dallas (Live Oak and Skillman, near Lowest Greenville), the Property taxes were $6,023/year, and the rents were a tad under $1,400/side.  And that was the market at the time. 

The duplex was built in the 20's had a lot of great period features, original hardwoods etc.  And was in as good of or better condition than the other similar duplex's that had come onto the market over the last 3-4 years (we physically looked at essentially all of them that came onto the market (maybe 15-20 or more) over the last 4-5 years.

Once you get near $2,000, unless you are in some sort of class AA high rise with pools and gyms etc, you will see people moving to SFH's.

I am not saying its impossible, just giving you my non scientific view having had a few rentals, with one being a duplex in Dallas of what I think you will find the market to be.