All Forum Posts by: Alan Duff

Have been looking at properties and working the numbers for the last year or so. Just looked at a duplex in an up and coming neighborhood. For the first year the cash flow is less than $300 and the cash on cash return is 0.75%. This is using normal expenses, deducting mortgage principal and no management fee. Numbers are impacted by available financing which is non-owner occupied, paying 30% down and a 15 year ammo at 4%.

It takes six years of projected rental income increases to get to a $2,000 cash flow and a 5% return.  Looks like a big investment for little return. Not sure if  the market is too hot just now or my expectations are unrealistic for current conditions.

Thanks Sue, that was my thought process. Base the rental income on the $600 per month. If it is possible to increase the amount that will be great, but I don't want to base the purchase on rent I may never see.

I'm a newbie working on my first deal. Looking at a duplex that is 2Br/1Ba. Craigslist yields $625 for a comparable unit in a stand alone duplex up to $775 for one with a fireplace and basement. Units in complexes in the area run from $660 to $724 for the same 2/1. Square footage is comparable for all.

The property I am looking at has a carport for each side as well as a sunroom on the back for each unit.  Fenced in back yard with divider fence.  One side is rented to a long term (10 years) tenant for $600 and the other side is vacant.  What should market rent be?

Thanks

Thanks for the replies. They would not move from $138,000 so I walked.

There could also be damage to the floor joists from the repetitive wet and dry. You would need a structural engineer to examine the house. Best to walk away.

The seller has came down some but is still not at my number. I'm dealing with the broker not the seller but is it a good tool to lay your cards on the table?

I can explain why my price works due to the anticipated cash flow. I used current rents and normal expenses for the property.   And also why I've asked for the seller to give some money at closing to take care of the deferred maintenance.

The seller should be doing ok at my price. It is $2,000 over what he paid for it and he has six years of income. First deal and just not sure how to proceed.

I live in West Knoxville but am looking to invest in North Knoxville. What do you guys who know the area think about the neighborhood surrounded by Broadway and Jacksboro Pike. Looks like a solid blue collar area with mostly small but well cared for homes.

I spent my public career in audit. You learn a lot about business and you can see how people run a company. Not much of that in tax and you typically do not interact with the people in the company. You just get handed a file and sit in your cubicle and prepare the return.

In my experience it varies a quite bit from chapter to chapter. My local one wants $500 per year for membership. Most of the meetings have guest speakers (vendors) that do presentations trying to sell their products. Almost all of the folks there are trying to sell their flips to you so not a lot of networking opportunities. I went as a guest (for $50 each) two or three times and haven't bothered going again. They have some high priced classes ($300) on the weekends teaching what you can learn on the internet for free.

You will have to try it for yourself to see if it is of any benefit.