Invest in a Duplex—Understanding Your Potential Returns
Based on the Fresno Housing Authority's updated rental guidelines as of April 1, 2023:
1-Bedroom: $1,272
2-Bedroom: $1,604
3-Bedroom: $2,260
4-Bedroom: $4,587
5-Bedroom: $2,975
Example Property:
Suppose you have a duplex with:
One 2-bedroom unit with potential rent of $1,604/month.
One 3-bedroom unit with potential rent of $2,260/month.
Total Potential Rent: $3,864/month
(Note: This rent is an estimated maximum. The actual rent may differ based on Housing Authority evaluations.)
Purchase Price: $350,000 (imaginary example)
Down Payment (25%): $87,500
Loan Amount: $262,500
Estimated Monthly Payment (PITI): $2,257 (This includes principal reduction, which builds equity each month. Verify actual figures with your lender.)
Monthly Income vs. Expenses
Total Rent Collected: $3,864
Gross Rent (after vacancy adjustment): $3,379
Expenses:
Mortgage Payment (PITI): $2,257
Utilities (water, sewer, garbage): $200
PG&E: $40
Landscaping: $100
Maintenance: $150
Vacancy Factor (5%): $195
Total Expenses: $2,547
Expected Monthly Net Income: $1,317
Monthly Net Return (including principal reduction): $1,817
Annual Income on Investment: $21,804
With an investment of $87,500, you could potentially achieve a Cash-on-Cash Return of around 25%.
(Formula: Net Annual Income / Total Cash Invested)
Conservative Estimate: Factoring in various market uncertainties, a 10% return on investment is still a good target.
Rent increases, potential property appreciation, and stable mortgage payments over 15 or 30 years can enhance long-term returns.
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