A few years ago, we were looking at buying some duplexes to expand our portfolio. There were a couple in the area for sale—one didn’t need any repairs and the other needed several.
At the time, I wanted both of the duplexes, but I didn’t have enough cash to put 20% down on each property. I knew that I would need to make repairs on the second duplex, so my cash was going to run low anyways. I told the bank that I couldn’t afford two 20% down payments, but that I had some cash set back for repairs if they would let me put 15% down instead, which they agreed to do. Below is the financial breakdown of the first duplex (45 & 46 Hubble Road) at the time we bought it:
Purchase Price: $169,000
Down Payment: $25,000 (15% of purchase price)
Amount Borrowed: $144,000
Monthly Rent (Per Side): $950
Monthly Payment (Per Side): $450 (47% of the gross rent)
Monthly Free Cash Flow (Per Side): $260
The first duplex was easy to get rented, and we’ve had it consistently rented ever since we bought it.
The second duplex (156 & 157 Pine Street) required some repairs, which we spent about $15,000 on. The rest of the financial breakdown is below:
Purchase Price: $155,000
Down Payment: $23,000 (15% of purchase price)
Amount Borrowed: $132,000
Monthly Rent (Per Side): $850
Monthly Payment (Per Side): $386 (45% of the gross rent)
Monthly Free Cash Flow (Per Side): $180
The tough thing about this duplex is that we inherited leases with low rents. Once the leases expired and the tenants moved out, we were able to raise rents to $950, which raised our free cash flow to $280 per side.
As far as the repairs went, one side only needed a few touch ups, while the other side required new flooring, plumbing fixtures, etc. After we got both sides fixed up, we got the duplex rented and it has rented ever since with only minimal issues.