Deal analysis and next step advice?

[Justin Fraser]

Hi BP! I found a potential first property that interests me and I put together the following analysis. Any help you can provide me would be greatly appreciated!

I found this property on Craigslist and it’s also listed on Realtor.com and Zillow. However, the numbers on this property look good from my initial evaluation. It’s been on the market since June, and the price has been reduced 3 times. The posting says the seller is motivated and will entertain all offers. This property is located an hour away from my home in the town where my wife went to college, so we are familiar with the area. (I'm comfortable renting to students when current tenants leave, if necessary).

The property is a duplex with a 3bd/1bath and 2bdr/1bath. Unit 1 rents for $1,516.66 (700 biweekly) and Unit 2 rents for $866.66 (400 biweekly). Both units are currently occupied with one new tenant one long term tenant. There is also a garage with the potential of being rented for additional income (not included in this analysis since I have not seen the condition of it yet).

The tenants pay sewer/water and the trash collection is included in the taxes.

My questions are:

Does my analysis look right to you? Am I missing expenses? I’m trying to be very conservative in my estimates.

What should my next steps be? I plan to call my realtor this afternoon to set up a time for me to view the property.

At what point should I talk to a lender to get specific details on closing costs and rate, and insurance/management companies for a quote?

Asking Price: $152,500

Purchase Price: $152,500

Down Payment: $30,000

Closing Costs: $5,000 (estimate)

Loan Amount: $127,500

Rate: 5.5% (estimate)

Monthly Income: $2,383

Payment: $721.09

Insurance: $125 (estimate)

Property Taxes: $530

Management: $240 (estimated 10% of income)

Vacancy: $200 (1/12 of income)

Lawn care: $100

General maintenance: $200

Expenses total: $2,116

Cash Flow: $2,383 - $2116 = $267/month

Cash on Cash ROI: 10.68%

Thanks in advance for your help on this, I'm really looking forward to getting my first deal done, whether it's this property or another.