So, what eve happened with the duplex? I've read through the thread, as I am putting an offer down on a duplex soon. I appreciated Praxis's post with the numbers on Internal return, Max ROI, and Expected ROI.
It seems to be, at the very least, a good starting point for discussing numbers when approaching an investment, and also omits the nominal, but I believe worthwhile mention of principal paydown on the monthly mortgage as well as the, once again, nominal but worthwhile mention of depreciation deductions on the property. I don't see those as factors for consideration on purchasing, but cherries on top of an otherwise good purchase.
My property is a $70,000 duplex, 20% down, 20 year, 4.5% note.
Total closing costs are $18,000.
Monthly mortgage is $1,000.00, conservatively.
IRR is 13%
Max ROI is 28%
Est. ROI is 14%
I am purchasing with my two side hustle business business partners/good friends. One of them lives in the city of the rental property.
I think the original question for new investors, like myself, is not whether this is a good deal. Like ARebelSpy so sagely pointed out, the good deals are less than 1% of the deals you come across.
I think the question should instead be, is this a bad deal. We are not looking to retire on this one property, but instead are relying on being able to scale up the amount of properties over the next 8 years. Despite some posters beliefs, experience is the best education I've ever received, not internet advice. So for a first property, I think the question is is it a property that you can learn from without getting burned too badly.
Of course, if anyone has a different take, I'd still reflect upon it and factor it in to the purchase determination.
More importantly, MorningCoffee, did you pull the trigger and buy the duplex?