First Time Deal Advice

[Bryan Palmer]

I will be a first time landlord and am looking for some advise.  My area is a sellers market right now and there are not many properties that look like they will give much of a return.  I found a duplex that is new construction in a low crime area and a block away from a great elementary school.  I like the idea of two units so that one can carry the mortgage if the other is vacant.  Each unit is a 3/2/2 at 1500sf and I think I could get 1400 a month each based on the area.  Being new construction I would not expect much in the way of CapEX or Repairs but have figured in 5% for each anyway.  Here are the numbers I am using and would a appreciate comments on any Red Flags or miscalculations.  Of course the numbers could change some if the purchase price or interest rate can be negotiated.

$298,500  Listing Price for the Duplex

$59,700  Down Payment 20%

$8,955  Closing Cost 3%

$2,000 Rehab (I feel this is overkill on new construction but want to have something)

$70,655  Cash Invested

$238,800  Loan Amount

$2,800 MO Rent (1400 MO Per Unit)

$1,281.93 MO Mortgage (30yr 5%)

$547.25 MO Taxes

$150 MO Insurance (I feel this is high)

$50 MO Utilities Trash

$224 MO Vacancy 8%

$140 MO Repairs 5%

$140 MO CapEX 5%

$2,681.93 MO (50% Rule)

$2,533.18 MO (Calculated Expenses)

$266.82 MO Cash Flow (133.41 Per Unit)