Deal analysis duplex with HELOC

[Ethan Griffel]

Hey all! I'm in the process of finding my first deal! I'm likely planning to use a HELOC for the down payment. I've looked at probably 20 or more properties and when I calculate the HELOC payments into my numbers most are coming back at right about 0 CoCROI and virtually no cash flow. I just looked at a duplex that I'd like to get advice on the numbers. The property is a duplex with split gas.

Unit 1: 2/1 with two car garage

Unit 2: 1/1 with off-street parking

Purchase price: 295k

Down payment: 20% from HELOC (59k)

Rehab: 5k

HELOC repayment: 1% of draw/month

Mortgage P/I: $1064

Expenses

Power: $100/month

Water: $75/month

Taxes: $200/month

Insurance: $150/month

Repair and maintenance: 5%

Vacancy: 5%

Capex: 5% (Roof and major systems all recently done)

Management: 8% (planning to self manage but trying to make numbers work as if I used a PM)

I figure the total rent for the two units conservatively will be around $2600. Possibly more.

Now with those numbers (PM included) and a HELOC repayment that's more than interest only it does not cash flow. If I calculate only the interest portion of the repayment into my expenses and take out property management I calculate about $400 month on cash flow and 8% CoC.

I appreciate any and all advice on the thought process and number running!