I already have a pre approval for a Duplex in Leander Austin TX (AKA the Burbs) at 6.5% rate and 25% down.

yr=2000 sqft=2300
Total Rents= $1700 (both rented and easy to rent)
$150 PM fees
$150 Insurance
1% Discount fees
10% less rents (estimated)
450/month property taxes

Price= 167,500
Comps= 185k and 100k singles across the street.

Can someone tell me if this is a decent deal? According to the real estate calculator given the above criteria, I'm not cashflowing however, I'm also not in debt. I followed the 1% rule where the rental income is 1% of the mortgage. This seems to be hard to do in this part of TX and feel lucky however, I'm not cashflowing. I know there is other long term benefits like principle pay down and writing the interest payments off on my taxes but still don't know how that would compare to simply putting my money into a 5% interest account CD or mutual fund. Please help and tell me what I'm doing wrong or if these numbers don't work.

Anyways thanks in advance for the advice.

It's a loser of a deal to me. Before in an appreciating market buyers wouldn't care if it cash flowed well. If it broke even and you could keep refinancing cash out every few months you were happy.

You would do much better investing in commercial land or retail with some owner financing. The point is you are new at this and need a professional in your area to help that deals with investment property. I don't like duplexes because as soon as one tenant goes down you are in the red.

In the commercial real estate market I am seeing properties with a 10 percent yearly return or higher. I would pass on this deal unless it is on a commercial corner with a lot of land where you can sell the land later for a higher use or you have additional land to build more complexes and add to it.

No it has no extra land and in the Burbs as stated. It's near schools and is a family area. One side has a 5 year renter and the other a 2 with no plans on moving out. If it did it would rent quickly.

Commercial loans sound horrifying with the even more tight standards and fear of a looming comercial RE downturn in the coming years. I seriously doubt I could even get one unless I pay a larger down and higher interest rate.

So what do you suggest I ask and what should my numbers look like for residential multi?

Actually the downturn is already here with a trillion dollars worth of loans to reset between now and 2013.

All the smart investors are gobbling up real estate to hold onto right now. Yes if you get a typical bank loan they will want more down today than before typically 30 percent instead of the 10 in the past. For commercial there are many willing to do owner finance and be the bank.

You could just invest in a TIC with a minimum of 50,000 and a promised return. The question is do you want to be hands on with real estate or just invest in it?

Try to find a quad as a foreclosure you can renovate and increase rents that will provide cash flow. Anything above a quad you will get into commercial financing. Some banks will let you take over the loan on an 8 plex for example that has been mismanaged with no payments for a few months. In commercial there are many ways to make money and in residential if your one way doesn't work out you are stuck.

I see, too bad all the 4 plexes in Austin are decades old and in lower class neighborhoods. Obviously when rents are too cheap collecting rents may become an issue and maintenance is higher as well as vacancy.

By the way no I do not plan on hand on. I invest remotely and don't even live in Austin. Infact, my PM on my SFH has been managing my place for the last 4 years. I only saw it once.

Reading in TICs now.

Here is a good website with lots of info for you.

http://www.tm1031exchange.com/tenant-in-common.html

Thanks

What would you think is a good deal on this dupe assuming everything else is sound? I would like to know so I can get an idea of what to look for.

Why would you go 125,625 in debt to BREAK EVEN ?

You would have to get this property close to 110k to even look at it. There are just to many awesome deals out there to look at marginal stuff such as this.

Holy smokes who the hell has 70k of equity in their home to begin with? Most these dupes if bought 10 years ago won't even see that much equity.

So, my new best friend, where do you find these? Surely not in the MLS? Those folks are still living in 2004. I ask for a 10% discount and they think I'm lowballing lol.

I work on computers for a living. So I'm not the type that can run down to the court house or make drug deals with the banks. I just don't have the time.

Any pointers for finding these props or better yet people who offer steep discounts for cash buyers?

If you don't have the time get with a broker in your area that specializes in investment property. An investment broker will have ties to many investors who purchase in bulk and then wholesale off to retail investors.

Work your numbers and explain this is the return you want to the broker. Explain if they can't find that return you don't want to look at the property. Remember there is much junk out there. You have to find the diamonds and get to them before someone else. Estate sales are great as they need quick cash because of the taxes of managing an estate. Usually the properties have a lot of equity but need repairs and updating.

A regular seller with 70k of equity will most likely just sit on the property and not sell. You would need to CREATE the equity in the form of a commercial short sale or repairs needed to the property increase it's after repair value. Also if you buy a duplex that is rented out for say 700 a piece but it is rundown and rents in the area are for 900 average a month then you know what to do. You buy it and then fix up the place and the up the rents to 850 a month and clear 300 more a month.

Remember full occupancy is not always a good thing if the property has deferred maintenance,questionable tenants,and rents are to low.

It sounds like you really need to use a broker as you do not have time for the upfront legwork which is fine. Many passive investors out there like doctors,lawyers,investor groups,etc.

Great advice thanks again.