I am hoping to get into the real estate business, and hoping to get some advice/math checking.
I live in a college town, so the rental business is usually pretty strong. I have an opportunity coming up on a duplex entering the market. It's a small little house, but well taken care of.
Info:
New Sewer line in 2002
New furnace, 90% efficient, in 2003
Basement apartment constructed in 2004
New roof in 2008
Interior rooms and exterior trim painted in 2013
Includes, 2 refrigerators, 2 apartment size ranges, 2 clothes washers and 2 dryers.
Income:
Two bedroom upstairs- $755 Currently leased until July 31, 2015
One bedroom downstairs- $465 Currently leased until July 31, 2015
The tenants have not been given access to a small garage. The current owner uses it to store some lawn care stuff and overflow from their garage. Potentially another $50 –$75/ month. New concrete floor in garage and driveway done around 2007.
Total- $1220/month, $14,640/Yr
Current Expenses (Annual)
Owner pays utilities, not easily split in this property.
Electric- $1340
Gas- $450
Cable- $859 Current owner not completely kosher on the cable here. They only have one service and its split between the tenants. This was a remnant from when their children lived there. Might just make tenants responsible for their own cable in future leases.
Mun. Serv- $1230
Insurance- $488
Taxes- $800
Management- $732
Total- $5,899 - I'd be taking out the Cable and Management expenses, obviously. If they want cable, they can pay for it themselves, and I'll have Optimum split it correctly. So takes total expenses to $4308.
So net income would be 10,332 (14640-4308). The price of the rental is listed at 137900. So that would make the mortgage payment a max of 802 per month (9624/year) on a 30yr mortgage at 4%, with no down.
So while there shouldn't be too many repairs, since it was taken good care of, that only is a max profit of $708 a year. Right? or have I done some math wrong? Obviously I can always try to lowball, and get it for cheaper, which would increase profit, but that just doesn't seem like enough of a profit for the heartache.
Please weigh in with your expertise, and let me know what other info you need.
Thank you, in advance!