Help me analyze 2 properties

[Paul Sassin]

Hey Everyone,

I need some help! Help me analyze these two Duplex Properties. Which one should I buy and and why? Or should I get both.

These are the numbers that I have been using to help me make the decision. Am I missing anything? Thanks!!!!!

134k- Converted duplex

built in 1920’s

Semi Updated

Average Neighborhood/Ave Schools

1600 Sq Feet

1 Bed Unit upstairs and

3 bedroom downstairs

20%- $26,800 down payment

PI Payment $592

Taxes-$333

Insurance- $91

Total Monthly Cost-$1017

Rents $1550

Total Cash Flow-$533

Cash Flow per door - $266

20%- $26,800 down payment

$7000 max in Rehab work

Total cash needed $33,800

Annual Rents - $18600

75% Less Variable Cost- $13950

Interest Paid annually $5620

Rent less cost minus int-$8322

NOI/Total Cash- Cash on Cash- 24.62%

250k- Duplex

built in late 80’s

Semi Updated

Good neighborhood/good schools

2400 sq feet

Two 3 bedroom units

20%- $62500 down payment

PI Payment $1035

Taxes-$395

Insurance- $108.33

Total Monthly Cost-$1539

Rents $2200

Total Cash Flow-$660

Cash Flow per door - $330

20%- $62500 down payment

$7000 max in Rehab work

Total cash needed $69500

Annual Rents - $26400

75% Less Variable Cost- $19800

Interest Paid annually $9843

Rent less cost minus int-$9956

NOI/Total Cash- Cash on Cash- 14.33%

[Jacob Sampson]

@Jaron Walling you make a strong point. Yes a true %24 COC return would be exciting to me. But a property purchased for $134k that rents for $1550 is not going to generate the numbers he is talking about. Here is how I look at things.

I pay 60 X monthly rent for a property in rent ready condition in a C+ or better neighborhood.  So if it will rent for $1000 I will pay up to $60k for the property.  If it needs remodel then that brings price down.

I consider true cash flow to be rent - 30% (vac, maint, and cap)-PITI = actual cash flow.

His numbers don't have any vac, maint, or CAPEX built in.