First Duplex Analysis - Am I missing anything?!

[Tim B.]

Good evening. I've been a lurker on this site for about a year or so. I'm finally in a position where I feel that I can successfully purchase my first property. My plans is to buy and hold rental properties. That being said, I've found a property that I feel is a good deal (assuming I did the numbers correctly) and want to get some feedback to be sure I'm considering everything. I've used the rental property calculator through BP and it seems good. Here's what I've got....

Asking price: $124,900 (I'd like to offer less to get a better COCROI)

After repair value: $124,900

Closing costs: $4,000

Repairs: $5,000

Down payment: 20%

Interest rate: 4%

Amortization: 30 years

Annual taxes: $1,423

Income: $1,300 total monthly

Utilities: $0 (paid by tenants)

Vacancy: 5%

Repairs and maintenance: 5%

Cap ex: 5%

Property management: 10%

Annual income growth: 2%

Annual property value growth: 2%

Annual expense growth: 2%

Sales expense: 6%

Am I missing anything here? With those numbers, I get $1,300 monthly income. $920.62 monthly expenses leaving me with $379.83 monthly cashflow. I'm also seeing a 13.4% COCROI (assuming I pay the full asking price). 

Please let me know if I'm missing anything. I'm pretty excited as this could be my first property to get me started in real estate and the first step towards financial freedom!

[Filipe Pereira]

Originally posted by @Tim B.:

Good evening. I've been a lurker on this site for about a year or so. I'm finally in a position where I feel that I can successfully purchase my first property. My plans is to buy and hold rental properties. That being said, I've found a property that I feel is a good deal (assuming I did the numbers correctly) and want to get some feedback to be sure I'm considering everything. I've used the rental property calculator through BP and it seems good. Here's what I've got....

Asking price: $124,900 (I'd like to offer less to get a better COCROI)

After repair value: $124,900

Closing costs: $4,000

Repairs: $5,000

Down payment: 20%

Interest rate: 4%

Amortization: 30 years

Annual taxes: $1,423

Income: $1,300 total monthly

Utilities: $0 (paid by tenants)

Vacancy: 5%

Repairs and maintenance: 5%

Cap ex: 5%

Property management: 10%

Annual income growth: 2%

Annual property value growth: 2%

Annual expense growth: 2%

Sales expense: 6%

Am I missing anything here? With those numbers, I get $1,300 monthly income. $920.62 monthly expenses leaving me with $379.83 monthly cashflow. I'm also seeing a 13.4% COCROI (assuming I pay the full asking price). 

Please let me know if I'm missing anything. I'm pretty excited as this could be my first property to get me started in real estate and the first step towards financial freedom!

While I certainly don't know your market, or what is available, I can't say these numbers get me all that excited. At full asking, this is around a "1%er" (as I call them), which means it will likely carry itself, but not much more. 

Some of your expenses seem a bit low, which makes me believe the property is relatively new, or in excellent shape - is this the case? The rule of thumb around here from what I have gathered is to do a 10% cap ex, 10% maintenance. This might not be the case every month, but the idea is that when you look at the property through a multi year window, this tends to become the case. Is trash included in taxes?

I hope that helps!
Filipe