Deal analysis in Lubbock, TX

[Surendran Palanimuthu]

Hi Bp,

  I have a duplex deal in Lubbock Texas. so, i thought i would run it across people in Bp to get some opinion. It is duplex for 315k with tenants in place. each unit rent goes for $1350. neighborhood is Indiana Ave and 98th street. 

CoC = 7.3%

Cash flow = $505

i understand that CoC should be at least 10-12% for a good deal. This is will be my first rental investment property. so i'm more looking at passive income and i think it qualifies $200 per door condition (from @Brandon Turner webinars). so, could someone from Lubbock area, let me know if this neighborhood is good for rentals.

Thanks!

[Tchaka Owen]

@Surendran Palanimuthu - thanks. Here's my thoughts:

1. Vacancy should be 5% at a minimum.

2. Mgmt Fee should be at 8%. If you find someone willing to do it for 6%, something's missing.

3. Repairs should be up to 5%. You don't have CapEx...it's near brand new so it's unlikely you'll have any issues for a while. Nevertheless, you should put some aside for the future. Perhaps 3%.

This will drop your cash flow down, but it's still an ok deal. Would I be super excited? No. Would I do the deal, likely yes. Any chance you can knock the asking price down a bit? Even if just to $300k, that helps. Also, how are the rents compared to market? Do you have the opportunity to raise them at renewal? Even $50 per side makes a difference. Cheers!