First Investment Property Purchase

[Marty Sheehan]

Guardians of the Equity,

I am currently under contract on a wildly mediocre looking investment duplex (2b/2ba per unit).  Since it is my first investment property (long time BP lurker, first time poster) I thought I'd put it out there for the community to analyze.  Looking for any and all feedback, feel free to be blunt.  I am also looking for advice on ways to set myself up for success going forward.  I have read a lot on here but everything helps.  

Here are the numbers,

Purchase Price: $165,000 as-is

Financed: $123,750 (25% down, couldn't put any less down with a conventional lender)

Mortgage Rate: 5.25% (no points); 5.35% APR -rates are on the rise it seems.

Estimated closing costs: $4,500

Initial cash invested: $46,310

Gross Rent: $1,725 ($875/$850)

Operating Expenses: $815 (includes mgmt fees @ 10% & capex of $275/mo)

Cash flow: $140.77

Principal reduction: $142

Cash-on-cash: 3.65%

Total ROI: 7.4%

Possible near future repairs: Roof (Estimated at $4,000); windows (Estimated at $5,000).  Don't think either require immediate action but I have a home inspection scheduled for Wednesday (4 days from now) to look into them and other potentials further.

Other property info: Current tenants have leases until August and January; Slab foundation; stand alone a/c in each unit; split meters for water/electric. 

I am planning on managing it myself, which would double my cash on cash and bump my ROI to over 10% until I am comfortable with the cash flow and willing to pay for management.

Having started my REI education about a year and a half ago after stumbling across BP podcasts as entertainment for my daily commute I am excited to finally take some action. This might not be the best deal, but it was the best one I could find in over a year. Time will tell and I'll keep everyone posted.

Thank you for taking a look and for your feedback,

Marty

P.S. If there is a way for me to upload my calculator (pictured above) I will, or I can e-mail it to anyone who asks. It has separate tabs for CapEx and Mortgage so you can keep the main tab cleaner. Also, you can edit it however you'd like to make it look pretty or tailor it to any of your potential investments.