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I'm thinking of purchasing a duplex for rental income purpose but I have a few questions that I need to figure out.
1) Is insurance more expensive for non owner occupied homes? Probably not, call your agent.
2) If the duplex does not have individual electric/gas meters, how do you charge the tenants. The duplex that I am currently considering (haven't seen with seller yet) has a single meter box but underneath are two square boxes that appear to be supplying electric to each unit however, there is only one visible meter unless these boxes are digitally metering? Call the utility, if not, make the seller install at his expense prior to close.
3) Do you provide pest control as part of routine maintenance? Yes, unless you want you place overrun with rats and cockroaches-see great advice above re bad tenants
4) Do tenants typically have separate garbage cans or shared, do tenants share the responsibility of putting out cans? Most cities provide cans for less than 3 units, tenants should take them to the curb (they often don't) but you should plan on having your weekly inspection on those days.
5) Is it safe to assume 10% of gross rent as an annual maintenance cost estimate for a fairly good condition property? This would be for non-specific maintenance as I will itemize things like gardener, pool service if applicable, pest control. If your duplex has a pool, you are buying the wrong duplex. %10 if nothing goes wrong is generous.
6) Most rental calculators want a down payment %. I am using zero down payment and assuming a 100% mortgage. Even though I am paying cash now and will refi later. I think this is the most conservative approach as there is a cost of money regardless of where it comes from. Does this logic sound right? How can you be zero down AND paying cash? If you are assuming the seller's mortgage, make sure assumption is granted by the lender prior to close.
As has been said before, you really want to think this through, maybe watch Pacific Heights on Netflix first.
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