Duplex Deal Analysis

[Account Closed]

Ok BP,

So I'm somewhat paralyzed by analysis. I am looking for my first investment property, and I've narrowed down my search to 2 markets and about 8 different properties (I know, probably not narrowed down by most standards). I keep looking at the numbers, doing research of the area, looking at google maps of the neighborhoods, etc., but I can't make a decision! The property I am posting about is the one that will give me the most cash flow/mo. but is, IMHO, the most risky based on the tenant quality and neighborhood.

Here it is:

2,010 sq.ft Duplex with Section 8 tenants in place:

Purchase price: $68,000

Rent total: $1,250

Property tax: $1300/yr.

Insurance: $600/yr.

Maintenance, Vacancy, PM: 10% each

Financing:

Down payment: $17,000 (25%)

Loan Amount: $51,000

Closing costs: $3,500

Initial Cash Invested: $20,500

Interest/ Term: 5.5% (conservative rate, will probably be better) 30 year fixed

Mortgage: $290/mo.

Cost/sq.ft: $34

Numbers:

Expenses including mortgage (including assumed vacancy/mtnce: $823/mo.

Cash flow/mo: $427

Cap rate: 12.7%

Cash on cash return: 25%

I do not know whether or not the tenants pay for utilities or if the current owner is paying utilities. I also don't know the overall condition of the property. At this point, I know that it has been rehabbed to the extent of indoor/ outdoor paint and refinished hardwood floors (not much, I know). I will obviously need to get an inspection report to find out about the overall condition of the property, but assuming no other issues, doesn't this seem like a good deal? Again, it has Section 8 tenants and the neighborhood is not the greatest, but also not a war zone area. Please take the above into consideration and let me know your opinions/experiences with Section 8 tenants.

An early thanks for your help!