All Forum Posts by: Lucas Duce

@Joe Villeneuve All these numbers are exact, and are rounded up to be generously conservative. The only estimates are the repairs and CapEx. You originally "LMAO"ed at my CapEx percent of 8%. I was informed that 5% for newer properties and 10% for older properties for CapEx reserves was a good estimate. I dropped it down to 8% since my initially $3,000 was going to go towards CapEx repairs and new appliances. Since 8% is too low, how much would you be dedicating to a CapEx reserve?

You've mentioned gross rent only being $700 twice now, I guess I should have made it more clear in my original post, but it's a duplex, so each unit is renting for $700, so a total of $1,400 a month. Unless you're running the numbers from a house hacking perspective with only one unit bringing in rental income, but I will only likely be living there for a year, so I ran the numbers as both units producing rental income. Which yields a positive cash flow.  

@Joe Villeneuve

Hey Joe,

Thanks for your input.  These are my numbers: (house hacking but running the numbers as if renting out both units). 

FHA loan of $77,200 at 3.875% interest rate.

EGI after vacancy: $14,310

Repairs, maintenance, CapEx: $2,576 (18% of EGI)

Management: $700 (but going to manage myself, included just in case which is why I slightly lowered it).

Insurance: $1,400

Prop. Taxes: $1,500

Water: $400

Garbage: $200

With PMI of $80/month the cash flow would actually be around $180, but expecting to refinance out after a couple of years.

Hello everyone,

I am a starting out property investor in search of my first rental property. I am contemplating making offers a possible duplex this week. My only hesitation is that it was built in 1876. The seller is asking for $90K, hoping to purchase for around $80K, the comps for the area are around $120K. Rents are about $700 per month per unit for the area. Estimating initial repairs of around $3,000. After running the numbers, I was getting a cash flow of around $250/month total. I had the insurance quoted at around $1,450 per year, which is double compared to a property built after 1940ish. I estimated that maintenance and repairs would be about 10% of the EGI, and the CapEx at 8% of EGI since it is an older property. I was wondering if there are any other concerns I should factor in with a property that was built in 1876 compared to a property built in 1950ish, besides the doubled insurance rate and the higher CapEx? Assuming that the foundation and structure are in decent condition. Thank you all in advance for your help.

Sincerely, Lucas Duce