@Jaysen Medhurst I know it won't work the way it is but as I said the rents are low according to what I found. To get it to average market rents would increase income by $560 (cash flow to $310.07). If the leases happen to be ending within a month or two and I have reserves to carry the place those two months and am able to get the purchase price down I was thinking maybe it could be a deal. I understand it would be taking a bet that the rents could be raised to that level with either the existing tenants (not likely they would take that increase well) or new ones so I ask what numbers would make it worth the risk?
As for your concerns with the expenses:
- Vacancy may be closer to 8%, depending on the market. I do like the more conservative number
- Repairs and CapEx, I figure 15% combined. I can bump that up too
- Insurance looks very high. Talk to a local insurance agent. I did go with the highest and will get a quote if I can get the numbers more desirable
- What about house utilities? On a duplex the water/sewer is usually paid by the landlord (not always). I would of course need to verify that with a viewing and double check what the listing said
- Lawn care? I would handle that myself
- You should always plan for some initial repairs. It looked very well kept but how much would you suggest before going onsite?
- You're unlikely to get a rate as low as 4%, unless you're going to owner occupy. See, another thing I didn't know, any suggestions here?
Thank you so much! I will adjust my numbers.
Dropped purchase price $5000 to $250,000
Added estimate repair cost of $1,000 (I heard that amount in a webinar I believe)
Loan interest rate to 5% (until I get further info)
Increased rent $1,130 x 2 units = $2,260
Vacancy to 8%
Repairs and Capex to 7.5% to total 15%
Monthly cash flow now $29.56 (woohoo I'm in the green)
Ok so I guess still a no go, oh well. Good night.
