Advice on a Duplex please

[Adam Frehm]

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Hi everyone.  I've found a duplex that looks like solid numbers / a good purchase to me.  (Pl. see attached report).  Seller's asking 399k, I ran the report at 390k purchase price.  I'd be grateful for your feedback in terms of if this is a good deal, and your creative advice on how to make a smart offer and possibly get in for less than 390k.  I assume it won't be long before it's gone in my hot, inflated market.  Thank you! 

More details: It's a 4 bedroom unit and a 2 bedroom unit and overall it looks to be in good shape. No major issues are noticeable to me. The roof is 16 yrs old and the siding needs to be stained.  I was guessing at 10k for closing cost and the 2 loan points, and hoping those are safe figures. The other expenses and income are accurate. I plan to manage the property myself so put only 2% there, but used 5% for CapEx,  5% in Repairs and set aside 15k at closing for any unforeseen rehab.  I ran it at a 15% down and a 20 yr payoff.

[Charles Soper]

At first glance I’m scratching my head a bit.

As financed at a 20 year term/am you aren’t hitting the 1% rule, im guessing this isn’t a bank loan based on the interest rate and down payment, family loan?

Additionally if you look at the 50% rule you are negative cash flow.

Is there a reason you’re doing 20 instead of 30 year mortgage?  I’d encourage you to rework the numbers with a 30 year mortgage, I think you’re numbers would work a little better.

A few more things:

1. Insurance seems low, is that a quote or a guess?

2. You said you will self-manage but you should still plan conservatively and hold out 10% ish for PM.

3. What are the comps in the area? If you're buying for $390k and putting cash but the ARV is still $390k something is off there, check your numbers.

Hope that helps