Any Thoughts On This 2 Duplex Deal?

I was looking at two duplexes that were recently built. The asking price for each was 175,000. I did some research and found that the 12 other duplexes in the new sub division have sold for between 175,000 and 180,000. I called the builder and he has 3 lots left and stated that he would build me the same duplexes for 165,000 since he would not have to use a real estate agent.

I would like to buy them by putting down 20 percent then refinancing after 6 months when I know they will appraise between 180,000 to 190,000 (I know the appraiser) so that I can pull some of my down payment out. I would still keep approx. 25,000 in each property. Below I set out the numbers, but basically with 750 rent (one duplex 30 yr. fix and one duplex 5% arm) my profit would be a little over 950. With Tax savings I estimate I will have about 16,000 in cash flow a year. Does anyone see a problem with this deal?

2nd question: I have been told that if I build I should shoot to have them completed in April or May, because it is easier to find renters in these months. I was told that it is hard to find renters in Dec. Jan. Feb. Any thoughts?



Investment Property

Duplex 1
Price 165,000.00
Down pmt 25,000.00
30 year note 140,000
Int. Rate 5.23
Payment 771.35
Taxes 200
Insurance 100
1071.35
Rent 1500
Profit 428.65

Duplex 2
Price 165,000.00
Down pmt 25,000.00
30 year note 140000
Int. Rate 4.78
Payment 686.26
Taxes 200
Insurance 100
986.26
Rent 1500
Profit 513.74

942.39

Comments(4)

  • mcq31st October, 2004

    I'm wondering are these rates all on 5 year arms and how are you getting such good rates. I have my duplex N.O.O on A 30 YR FIXED AT 6.375

  • Young_Inno_Vative6th December, 2004

    the only problem i see with your deal, is the low rates
    wish i could get them haha...but it looks good to me
    the numbers add up....does it give you the feeling of too good to be true? i dont undersand
    looks good to me just trust yourself...
    the deal looks good
    ~Andrew

  • rmdane20006th December, 2004

    just an FYI...rent - PITI doesn't not equal profit...

    profit is an accounting term referencing the accrual method and such things as depreciation should be taken out to figure profit...but...

    Also, rent - PITI doesn't equal Net Operating Income either

    you have to account for vacancies/collection loss, repairs/maintenance, reserves, utilities you might be paying(i'm guessing they must all be on seperate meters?)

    Its really just cash flow after PITI, I don't have a better title than that....

  • Apprentice2Him14th December, 2004

    Are taxes really that cheap where you live?

Add Comment

Login To Comment