Duplex Deal Analysis

[Michael C.]

I'm looking at an REO Duplex (3/2 & 2/1) that a realtor sent me. One highlight that turns me on is that I can use Conventional. Property looks pretty good inside. Below are the stats:

Asking Price: 70 k
Dwn Pmt 20%: ~15k

Mortgage $365.92 (55k financed @7% 30 yr)
Taxes 400.35
Insurance 100 (have no clue what insurance would be (should be alot less)
Maintenance 80 (another guesstimation).
prop mgmt 160 (10% of gross rent) If I am not willing to manage myself.
Total Expenses: $1,106.27

Gross Income: Conservatively: 1600, $1750(low avg w/in 1.5 mile radius according to Rentrange) If I go section 8 I can max 1450/month on 3/2 and 1200/month on 2/1= 2650!)...but charging that much I will not be able to get regular tenants not on section 8. I do not want to sit on a vacant property.

NET $493.73 (going off the most conservative #s of $1600)

Rules
2% 1400 (this rule is met easily)
50% 800 (need to get expenses below$800 to make this a deal?)

This is in a Fair residential neighborhood. Not a warzone. I was thinking of sending a lower offer at say~ 55-60k.

What do you guys think?

[Mike McKinzie]

From what you posted, I would offer $50,000 and then go from there. If the seller comes back at $60 or $65, then that is up to you. Duplexes have a little more expenses than an SFR as the owner usually pays some utilities, especially if they are not separately metered. If there is little deferred maintenance, this might be a good investment.