[Calc Review] Help me analyze this deal

[Ward Sorrick]

Hi BP Forum,

My brother and I are getting close to making our first purchase on an investment property. We're looking for cash flowing small multifamily properties for out of state investing. I've analyzed the numbers for a duplex in Bedford, OH, and the numbers check out (see report below). The property manager we've been talking to says we can actually get more income than what the current tenants are paying; however, I'm using the current rates since that's the income we'll generate as soon as we buy. I figure if the numbers work at the current rates, we are only better off if we can increase the NOI.

What makes me nervous is 1) just pulling the trigger on a making our first purchase, and 2) I'm nervous that Bedford is not a great part of Ohio. Neighborhoodscout.com says 62% of the population is economically disadvantaged as compared to 24% for the rest of the state. Is that a reason to be cautious in making an investment in this area? 

I'm also nervous that we won't see the value of the property appreciate much in the Bedford area and that we may have trouble selling at a profit if/when we decide to exit. The property was listed at $130k in March of this year, dropped to $125k in April and then to the current price of $115k in June and has sat on the market for 37 days now. A SFH 5 bed, 2 bath in the area recently sold for $94k. Granted that was not an income generating property, but it's concerning that a comparably sized home sold for so much less.

All in all, while the numbers work out, is the quality of the tenant pool and the market in this area valid cause for concern? 

View report

*This link comes directly from our calculators, based on information input by the member who posted.