Analyze this duplex with me in

[Christopher J Lemmon]

Here is potentially my 3rd investment property purchase. A duplex that is currently rented.

Price $83,000

Rents $575x 2 = $1150

Down payment = $20,750

Inspection = $450

Appraisal = $450

Title =$1200

Insurance = $1100

Loan Org. = $1000

Seller concessions = $1500

Total all in = $23,450

Monthly costs

Management = $115

Cap Ex = $100

Repairs = $50

Taxes = $107.5 $1290/year

Insurance = $92. $1100/year

Vacancy = $92

Principle & Interest = $340

Total monthly costs = $896.50

Cash flow = $1150-896.5= $253.50

Per unit cash flow = $126.75

Cash on Cash return = $253.50x12 / $23,450 = 13%

Cap Rate = $7122/$83,000. = 8.6%

Would you take this deal?

Thanks for your comments or questions! 

[Christopher J Lemmon]

@Bo Kim I did not use a turn key company. This deal was on the MLS. I have considered the trade offs of SFR vs. Duplex.

Here is my take on the trade offs. 

SFR — advantages, generally better appreciation, tenants do not fight, fewer things to "referee," tenants take more responsibility generally when they have control of the whole property. Tenants stay in SFR longer than in duplexes or apartments. There are a lot more to shop for, duplexes can be hard to find in some markets.

Disadvantages - more risk only one income stream when you go vacant, cap ex cost more because it’s not shared by two or more income streams, generally lower cash flow than a multi family. 

Duplex 2-4 unit 

Advantages - better cash flow, less stress for the owner, one tenant can pay the payment while you turn the other unit, gives more income streams, if you own 2 duplexes that is 4 units, if you own two SFR it's 2 units, if one is vacant and you loose half your income. With duplexes the risk with vacancy is spread over more units.

Disadvantages — low appreciation, tenants do get into conflict, more tenants expect you to pay for the snow to be cleared and the grass mowed. More likely for people to move out because they want more space or don’t like the noisy tenant next door. Harder to find duplexes, triplexes, and 4 plexes. 

I have 1 duplex and 1 fourplex right now. I am trying to buy a second duplex. I have priced SFR, but not bought one for investment yet.

Chris