Duplex Cap Rates - West Allis, Greenfield, Milwaukee

[David Benson]

Hello All, 

I'm in the process of looking for my first duplex in the West Allis / Greenfield area of Wisconsin. I've been analyizing several properties, but where I could use some help is determining what is a good cap rate for this area? 

FYI, this will be a house hack, and below is an example of what I have been assuming for expenses, etc. when calculating the Cap Rate. I have broken it into 3 different situations: 

1. 1 Unit Rented (House Hack) - Managing the unit, doing yard work, etc.

2. 2 Units Rented - Managing the Unit, not doing yard work, etc. 

3. 2 Units Rented - Not Managing the Unit, not doing yard work, etc. 

Any comments would be greatly appreciated!

[Rob Myers]

I have a couple duplexes in the same area you are looking at and can share a few of my numbers for what it is worth.

1.  Your insurance number is about double what you should be paying if not owner occupied.  Look for an independent broker relationship if you don't have one already.

2.  Purchase price - there are better deals out there.  Seems like you might be overspending a bit for the area.

3. Capex vs repairs. I'm around 12-15% for both. Your numbers are a little conservative depending on the condition of the property

4.  Water is a touch low.  I'm averaging $100/mo for a duplex.

As far as returns, I aim for $150-$200/door.  Done right, you should still be able to find this in your target area.  Good luck!