First investment (Northern NJ duplex)

[John Papa]

Hi all,

I'm currently looking at a two family duplex in the NYC tri-state area. This is a very desirable area with a lot of young professionals commuting to the city, and people looking to start families.

One thing that I've noticed is that properties in Northern NJ are so damn expensive, and the taxes are ridiculous! Given these factors it seems difficult to cash flow. How do investors in areas that are as expensive as the NYC tri-state area earn a decent cash flow?

Here are the numbers

List price: $365,000 (brand new renovation with granite, SS appliances, and hardwood floors)
Taxes: $9,711/year.
Insurance: ~$1,200/year
Water/Sewer: ~$450/year

Using very conservative rents given to me by my realtor:

Rent (separate gas and electric in each unit):

Unit 1: $1,350
Unit 2: $1,800 (could possibly get $2,200, but again, I'm being conservative).

Annual Rent(11 months to account for any vacancies): $34,650

Annual OpEx assuming 100% financing at 4%, 9,200 in taxes, 1,200 insurance, and 450 water and sewer: $32,316

Gross Profit: $2,334

I am going to make an offer for $335,000 and plan on putting 20% down, but I using the list price because I want to see if the property can cash flow without forcing profit with a money down. What else do you think I should be looking at? I'm aware of the 50% rule, and 2% but they seem to not even exist in my market...

Thanks everyone

John