Author Topic: Relatively new landlord - feedback appreciated!  (Read 2845 times)

YoungGranny

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Relatively new landlord - feedback appreciated!
« on: June 20, 2017, 09:18:12 AM »
We're looking to add a duplex to our investments. Here's the breakdown for the unit:

Original Purchase price: $135,000 (we plan to offer lower so this would be the high end)
Original Mortgage Amount: $101,250
Interest Rate: 4%
Mortgage Term: 30yr
Gross Rents: $1,700 ($850 per unit)
Principal and Interest:  $483
Taxes and Insurance: $408
Vacancy (7% standard rate for our area): $119
Maintenance(using 5% rate): $85
Prop Mgmt: $170
Cash Flow: $435
Cap Rate: 11.95% - using (http://www.proapod.com/calculator/free/o_cap.php)

The unit is actually in good shape so we don't anticipate any big expenses popping up for a while. Roof, appliances etc are all relatively new. From my above analysis it seems like a good purchase but we are relatively new to this whole real estate process so I was curious to see if I'm missing anything in my analysis.

Thanks in advance for your feedback!

Blindsquirrel

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Re: Relatively new landlord - feedback appreciated!
« Reply #1 on: June 20, 2017, 06:51:46 PM »
  Is it currently rented? If not why not? Can you increase rents or is that high end of range? How does it compare to other deals, your other investments?  Numbers are not bad at all but not stellar if in Ohio- (only market I know).

YoungGranny

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Re: Relatively new landlord - feedback appreciated!
« Reply #2 on: June 21, 2017, 05:50:58 AM »
It is currently rented but they are month-to-month since their lease ended and the landlord was trying to sell. We would prefer signing a lease if they opt to stay. It is currently priced around average for the area but it does have an attached garage and most of the comps don't. It seems to me that should be an amenity that could increase the price. We'd probably target $900 based on the good condition of the unit + garage.

I should have mentioned we only have 1 other investment property. We paid $35k for a 'condo' - it's basically a single unit of an apartment. We DO pay an HOA fee on it which I know is usually frowned upon but we bought that unit with cash and charge $800 so even after maintenance/vacancy/HOA/prop. mgmt we have a $475 cashflow. I guess when I look at the duplex we'd be putting about the same amount down for a somewhat similar cashflow.

Cwadda

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Re: Relatively new landlord - feedback appreciated!
« Reply #3 on: June 21, 2017, 06:51:22 AM »
From the info you've provided, go for it. But run your numbers many times to be sure.

If you're going to raise rents, make sure the tenants aren't going to have problems with that or that there's a plan to get them out. You don't want an eviction. That will eat most of your cashflow.

Cwadda

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Re: Relatively new landlord - feedback appreciated!
« Reply #4 on: June 21, 2017, 06:51:41 AM »
Whoops, forgot to attach the cashflow spreadsheet.


YoungGranny

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Re: Relatively new landlord - feedback appreciated!
« Reply #5 on: June 21, 2017, 10:37:53 AM »
Whoops, forgot to attach the cashflow spreadsheet.

Yup I love numbers so I just keep re-running them. Thanks for sending that spreadsheet over - that's a nice way to break out capex and itemizing each area. Super helpful. I think we may move forward on this one.

Blindsquirrel

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Re: Relatively new landlord - feedback appreciated!
« Reply #6 on: June 21, 2017, 08:23:05 PM »
  Looks like a good deal. :)

calimom

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Re: Relatively new landlord - feedback appreciated!
« Reply #7 on: June 22, 2017, 09:49:48 AM »
I agree that the numbers look good on this. Any change you could self-manage and save the PM costs? I've co-owned a duplex for about 7 years. One unit needed a rehab which took a few months, and we've had almost 100% occupancy rates since that time with few tenant issues. Duplexes are great rentals for singles, couples and small families.

Good luck, let us know how this goes. I'm happy having rentals in my small investment portfolio.

YoungGranny

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Re: Relatively new landlord - feedback appreciated!
« Reply #8 on: June 22, 2017, 10:02:23 AM »
Thanks for the advice @calimom - we actually will self-manage so we'll be paying ourselves the $170. I just included it because someone in the business gave me the advice to make sure your properties produce a positive cashflow with a 10% PM rate since someday things may change and you might not want to self-manage. But for now that extra CF will be an added bonus :)

Glad to hear from someone enjoying a duplex investment. They accepted our offer so pending the inspection I'll be adding another property to my portfolio.

NoNonsenseLandlord

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Re: Relatively new landlord - feedback appreciated!
« Reply #9 on: June 22, 2017, 03:52:05 PM »
Without knowing all the additional details, a 11%+ cap rate is great for a duplex.

YoungGranny

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Re: Relatively new landlord - feedback appreciated!
« Reply #10 on: June 30, 2017, 09:06:47 AM »
Just wanted to thank everyone who stopped by and offered advice. A quick update - we did move forward on this duplex and got an accepted offer. The inspection was earlier this week and went well. We should be closing on this property before the end of July. Pretty excited to be growing our side business :)

Cwadda

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Re: Relatively new landlord - feedback appreciated!
« Reply #11 on: June 30, 2017, 12:18:09 PM »
Looks like it'll be a great property for you. Congrats!

Aggie1999

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Re: Relatively new landlord - feedback appreciated!
« Reply #12 on: July 01, 2017, 08:57:22 PM »
On the "renewing a lease" thing I never quite understood why landlords want this instead of allowing the tenant going month to month. In my view once a renter has been there for a year let them do month to month if they want. Most will. If they are decent renters the hardest thing on a house is the move-in/move-out. Why rock the boat if the tenants are happy.

My parents have been landlords for 30+ years. They have multiple renters going month to month for years. A lot of renters will think about moving in the back of their mind but won't act if they know they can move with a months notice. Put a new year commitment in their face and their decision just get's escalated to now.

Side note: The above advice may not apply when the house changes owners as in the OP's situation.

Nickels Dimes Quarters

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Re: Relatively new landlord - feedback appreciated!
« Reply #13 on: July 02, 2017, 03:30:32 PM »
Congrats on your accepted offer. I bought my first property a year ago. It is a four-plex and I live in one of the units. I pay myself rent, the expenses have been low once I spent a good chunk on updating my unit, and I have good/dependable tenants. I'm saving now for the next property and plan to have three of these before I retire. I think it's a great business and will be the perfect gig during retirement.

NDQ