$55k Duplex Deal Analysis

[Mehran K.]

Hi all,

The last analysis I posted turned out not to be that hot of a deal. This one seems a lot better. Any help would be appreciated!
Here goes:

Duplex

Purchase Price $55,000
Rents: $1,075 ($550 and $525) Each are 2/1
Property Tax: $925
Insurance: $700
Maintenance, PM, Vacancy: 10% each
Utilities: All payed by Tenants (separately metered)

Financing:
Down Payment: $13,750 (25%)
Loan Amount: $41,250
Closing Costs: $3,000
Cash Outlay: $16,750
Interest Rate/Term: 4% @ 30 Years
Monthly Mortgage: $197

Numbers
Monthly NOI: $646
Monthly Cash Flow: $449

Cash ROI: 32.14%
Cap Rate: 14.09%

Heres some info on the Property:
Pros:
1. Numbers look good!
2. Tenant occupied - One tenant has been there for 3 years. The other, 4 months and is a close friend/relative of the first tenant. PM says they are some of her best tenants. The First tenant is meticulous and is a neat freak.
3. Only duplex on a street of all single family homes.

Cons:
1. 1 Furnace is 18 years old, and the other is 38 years old!
Info: Current owner says they have been working great and have been serviced/tuned last year. He doesn't pay utilities so he isn't concerned about inefficiency. His last buyer walked since because he wouldn't give a concession/fix the 38 year old furnace. He regrets it and is willing to take care of that now.
Dilemma: Lender says max concession is 2% ($1098) I believe the seller increased the price from his previous listing (where buyer backed out) by $2,000 so he can handle a concession. I'm asking the broker for comps that show this thing will appraise for $55k or maybe more (thinking maybe we can just add the cost of the second furnace into the purchase price also?)
How would you handle this situation? How much do basic furnaces run that can heat a 1150sq. ft. 2/1 unit?

2. I got the inspection report from the last buyer and it says the fiberglass shingle roof is 10-15 years old and that the average life is 18-22 years.

That's pretty much it that I can think of. The owner is supposed to send me a copy of the inspection report with all the things that he has fixed/repaired since the inspection from the last buyer (minor/general stuff)

Any more seasoned investors able to share their thoughts on the Furnace issue. How about the roof?

I work graveyard shift and am going to sleep soon. I won't be able to respond right away! I'll definitely check all the posts later tonight.

Thanks in Advance!