Is this $420K duplex too expensive? (Sacramento, CA)

[Cody Kitaura]

Hi all, I'm looking at my first potential duplex and I'm having a hard time figuring out how to estimate some of the costs. This is in Sacramento, CA, so I think a lot of the costs will be pretty high compared to other posts I see on here, examples in the books, etc.

• List price: $420K
• Year built: 1950
• Time on market: 40+ days
• Repairs needed: New roof, according to current owner (it looked OK when we walked through, but I've budgeted $10k for it?)
• Recent capex: Both HVAC 5 years old, water heaters 4 years old
• Unit one: 964 sq ft, vacant, market rent $1500 (I saw an identical house down the street with a "for rent" sign at $1575)
• Unit two: 964 sq ft, rented, $1250
• Property taxes: $5,500 / yr

The seller seems antsy to sell (the owner is a realtor and apparently emailed our realtor twice yesterday asking if we're interested), so I'm targeting $400K, with 20% down.

The current owner provided these numbers:

• Annual operating expenses: $6,000
• Annual utilities: $4,000
• Annual insurance: $600

When I use DealCheck, sometimes it has positive cashflow and sometimes it doesn't, depending on what I put for vacancy, capex, maintenance, etc. I would definitely need landscaping (big front lawn and several small trees), so I've put that as $100/mo.

It definitely doesn't meet the criteria of things like the 70% rule or 1% rule, but I don't know how realistic those are in Northern California. The price is similar to others comps in the area.

Thanks in advance!