04 Jul Duplex analysis. Not worth it? (MN)
I'll be ready to purchase a property in about 12 months and have been looking into buying a duplex. However, the more I look into it the more it seems it may not be a very good financial decision. The following is the typical scenario I am running across and I'm hoping some experienced folks could weigh in on whether or not it makes financial sense.
Cost of Duplex: $225,000. Built in 1970s/80s. Assume limited amount of work needs to be done initially (just painting, landscaping, etc.)
Unit 1: 2 bed/1 bath – $925/mo rent – tenant pays utilities
Unit 2: 2 bed/1bath – $925/mo rent – tenant pays utilities
Total rent per month: $1850
Mortgage/taxes/insurance after 20% down: $1200/mo
Maintenance costs (15%): $278/mo
Vacancy (3%): $56/mo
Income after expenses: $316/mo.
What do you all think? What expenses am I missing? This obviously does not meet the 2% rule; however, I know that is controversial. I look forward to hearing/learning from you all.