I've been reading a lot on these forums and have bought a couple of books from this site. I've learned a ton. I've also been putting together my team with a lawyer and banker. Everyday I practice analyzing deals that I see and yesterday I actually came across what I think is a good deal. I ran it by my banker and he agrees. My only problem is coming up with the down payment. Also, I'm not 100% sure of the process. Any advice, suggestions, or ideas are welcome.
I found a duplex that is listed for $105,000. The total monthly income is $2200. Both tenants that are currently in the property have been there for 5+ years. The owner has equity and needs some cash so he is motivated to sell.
The numbers I ran look like this:
$26,400 in annual income
($14,590) in total expenses - 55%. This includes 10% for vacancy, 10% for CAPEX, 10% for management, and 5% for reserves.
$11,810 = NOI
My banker says he would loan the money to an LLC, which I don't have yet, for 25% down. So the financing would look like this:
$26,250 - Down payment
$78,750 - Loan
5% for 30 years = about $425 per month
Using these numbers I get a monthly cashflow of $560 and a Cash return of 23%.
What am I missing? It sounds like a great deal.
My biggest hurdle is the $26,000 down payment. I don't have that much saved yet. I only have about $10,000 that I can use. The bank won't loan anything on my primary residence because I don't have quite enough equity.
