Analyzing a rented duplex

[Michael Davido]

This is a deal that the BP calculator seems to make work.  It would be my first investment property.  It is about 1 hour and 15 minutes from where I live.

Purchase Price:  $139,900

Closing Costs:  $6,300 (I went with 4.5% here but I don't know the exact number)

Interest Rate:  4.5% (Estimating)

Term: 30 years

Loan Amount: $104,925 (25% - I checked my local bank and they told me they required 25%, but I will shop around)

Rental Income Total:  $1,650 (Based on BP Insights, rents are on the low end and could probably be increased)

Property Taxes:  $3,880

Insurance:  $1,000/yr (Overestimating.  I don't know.  Zillow says it is about $600 per year)

Repairs:  5%

Vacancy:  5%

CapEx: 5%

Property Management:  10% (I figured I'd go toward the high end)

No money set aside for things like electricity, garbage, etc.  I would need to look into that.  There is a picture showing two hot water tanks but that probably doesn't mean anything.

Total Cash Needed:  $41,275

Cashflow:  $299/month

CoC ROI: 8.72%

I think my estimates are on the high end.  If anything, I'd try to come down off the asking price.  Am I missing anything?  I'm going strictly off of what is taught in the webinars and other BP videos.

Thanks!

[Nick Robinson]

@Michael Davido
So when I analyze a deal I like to be more conservative and don't assume your going to just be able to jack up rents right away.  See if the deal works as is and have the rental increases there for future projections.  For rent if you are going to use a PM just ask them what they think units in the market should go for.

Rent $19,800     For year
              -50% Expenses 
              -10%  PM
        $7,920
      -$6,379.68   (Assuming your $104,925 loan @ 4.5% is $531.64/mo)
       $1,540.32 Cash Flow

Cash Flow               $1,540.32
Totaled invested     $41,275

Equals a CoCr of 3.73%

You forgot the mortgage price