Duplexes? Math help? Rehabs? Interest rates?

[Karen M.]

Hi Everybody,

OK, so.... I am starting to learn more and look at "deals" and try to figure cash flow for multiple properties using a spreadsheet. This is mostly practice right now as I learn how to look at properties on paper for cash flow potential. Eventually, we would like to get into buy and hold for long term rental income.

QUESTION #1 --- Are duplexes really a big PITA? I'm reading Landlording on Autopilot by Mike Butler and Building Wealth One House at a Time and both mention that duplexes and small apartments are for investors and that it's harder to negotiate and harder to unload these properties. But since our model is buy and hold, perhaps I will never need to worry about unloading them.... except for that exit strategy business...

OK. So I've been studying our MLS for like, 10 - 15 days, and I've been curious about a few duplexes that are near where I live. A duplex very near my home has been on the market for *11 months* and three duplexes on the same street just had their MLS listings expire, unsold. I am not crazy about the street full of duplexes, it doesn't look like "home" to me... but the one in my neighborhood looks interesting.

So anyway.... back to the question #1.... are duplexes a big pain in the rear, or are they a decent choice for buy and holders? Does the slower duplex market make for better deals for the buyers?

QUESTION #2 --- How do I calculate return on investment? I am quite confused on this. Let me show you the math for this duplex on the market near my house.

$239,900 asking price
$204,000 hey maybe I could work out a 15% discount?????? Is that a big reach?

$ 51,000 one heck of a 25% down payment

$153,000 amount financed @ 4.5%

$ 2,100 total rent income
$ 1,050 50% of rent income (this is actual rent now)

$ 775 principal + interest for 30 years @ 4.5% (do I need to add ins?)

$ 275 projected cash flow

Now.... first off, am I doing these calculations correctly? And, how do you figure return on investment? As in, to decide whether this is going to be a good investment vs. looking at other, non-RE opportunities, or even other RE opportunities? And, as buy and hold does the roi get better over time?

QUESTION #3 -- I am also looking at some "cheap" distressed SFH where I can see pictures of holes in drywall, ratty wood floors, stuff like that. Are there any good places to read about rehabbing?

QUESTION #4 -- It seems that interest rates are going to go up. I don't want to feel pressured to get into RE but I wonder how rising interest rates will affect RE investors and the market and people who are starting out w/ RE.

THANKS A BUNCH!

Karen