Rental House #15 – Another Duplex Added to the Portfolio

by Stealthy Rich · Published March 1, 2019 · Updated May 20, 2020

8/2014

2350 Sauntering Sunlamp – Duplex #2

As soon as we got House #14 locked down, we were all ready to go on a second duplex nearby. We found this property through our yellow letters yet again. These letters are making us so much money! Somehow, those little yellow letters allow us to buy property at a significant discount continually.

Rental House Details

The duplex again was half of an entire duplex, as each half is separately addressed here where we live. House #14 was the left side, now this property in the right side of a duplex. This house was larger than the previous duplex, as it was three bedrooms, two baths, and 1220 square feet. This one needed some work, so we repainted it all and replaced the floors and appliances as well. These duplexes also do not have garages, just a driveway.

Finances

We luckily got this home under contract for $53,000 ($55,500 with $1,500 back at closing). We financed $44,400 or 80% with our favorite local bank once again, which meant we needed to bring about $9,500 to closing with additional costs. We then found a renter for $860 a month—a solid 1.5-1.6ish on rent to purchase price. Phenomenal deal.

For whatever reason, these two duplexes we’ve purchased show well in terms of cash flow but where they are terrible in the appreciation department. They are pretty run-down neighborhoods, built worse than our standard brick houses, and they don’t have garages. Subsequently, we get a little lower quality tenant.

Storytime

The renter at this place lost his job during the oil downturn, and he couldn’t pay. We worked with him, but eventually, they needed to move. He left a broken-down engine in the driveway. It was a mess, oil everywhere. However, the best part was that about two months later, we learned he got fined for illegal dumping as the cops found a ton of garbage in a field somewhere, and there were docs in it with his name and address on it. Sucka! So yes, the tenant quality for these duplexes seems to be a bit lower than what we have in our previous properties. Nevertheless, It’s hard to pass the fantastic cash flow they provide.

Rental House Pictures

Sad pics I know…( We hadn’t hired a photographer yet at this point in our journey)

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Let’s Do the Rental House Numbers!

Line Item Detail	Amount	Comment
Purchase Price	$55,500	Slam dunk! We also got $1,500 back at closing so Total price is $53k
Down payment 20% used portfolio loan at local bank	$11,100	20% down on a portfolio loan at 5.125
Closing costs	$1,547	Closing cost -after all pro-rations and deposit transfer and seller contribution
Total cost of deal	$57,047
Anticipated Rent	$860
Monthly Mortgage	$298	20 year portfolio loan at %5.125
Anticipated monthly Expense	$100	Average of $1200 a year in expenses
Monthly property taxes and insurance	$125	less taxes because its a duplex
Monthly cash flow	$337	Good one
Rent to Purchase price Ratio	1.55%	This is a another home run for us.