Help me analyze Deal

[Account Closed]

Found a owner selling a 2 family, The asking price is 55k and the yearly taxes are 2500. The 2nd floor is rented out at 625, the first floor is vacant but could get 650-675 2 bedroom but has a den. All the rehab is done

I have 25% to put down so

14k down
potential rent income 1250 x 12 = 15000
Yearly taxes 2500
Insurance= ?
vacancy = figure one month of both units being vacant.( area looks good not a war zone but in a city)

Monthly
finance of 41k over 30 years at 5% about 250?
taxes=210
Insurance=?

This would qualify the 50% rule

[Sharad M.]

Hi John,

Based on the numbers you provided, it looks like a decent deal.

Monthly rent = $1,250
Expenses @ 50% = 625
NOI = $625

This gives you a CAP rate of 13.6%. It's not the best, but not bad either, IMO.

$41k financed at 7% (your 5% number seems low) for 30 years, gives you monthly payment of $272.77

After deducting your monthly payment, you get net cash flow of $352 ($176/unit). The minimum investors on this forum want is $100/mo/unit and you are getting better than that.

But there are other things you need to consider.

1) Have you checked with the city that both the units are legal and conforming?
2) Why is the owner looking to sell the place? Is he behind with the payments? If not, doesn't hurt to check with the owner about doing owner financing.
3) If you are not totally familiar with the neighborhood, I would call the local police department and speak with someone to get some more information on the area.

Good luck.