Teardown: a $245,000 Killeen duplex, run end to end

The listing

A side-by-side duplex on the east side of Killeen, near Highway 195. Built in 1986, brick exterior, 3 bed / 2 bath on each side, around 2,200 square feet total on a quarter-acre lot. Both units occupied at $1,200 a month. Six months left on one lease, month-to-month on the other.

Asking price: $245,000. Originally listed at $259,000, cut to $245,000 about two weeks ago. The listing photos show original cabinets, beige carpet, vinyl tile in the kitchens. Roof reads as 6 to 8 years old. HVAC condensers look 10 plus years old in the photos. Water heaters unknown.

How it landed in front of you: a saved MLS search for Killeen, 2 to 4 units, under $300k, listed in the last 60 days. Eight properties match this week. This is the one with the most current information and the most movement on price.

The financing assumption

Standard investment loan: 25% down, 30 year amortization, rate quoted at 7.0%.

• Purchase price: $245,000
• Down payment (25%): $61,250
• Loan amount: $183,750
• Estimated closing costs: $4,500
• Initial repairs and turn budget: $5,000
• All-in cash at close: $70,750

Monthly principal and interest on $183,750 at 7.0% for 30 years: about $1,222. Annual debt service: $14,664.

Line 1: Gross scheduled rent

Both sides at the current $1,200 a month is $2,400 a month, $28,800 a year. The listing agent will quote "$1,250 each at market," and a rent comp check across three sources backs that up for a clean unit at $1,250 to $1,300 per side.

Use $1,250. Gross scheduled rent: $30,000 a year.

This is the largest input in the analysis. If it is off by $100 per side, the bottom line moves by more than $2,400. Verify with current rental comps before going further.

Line 2: Vacancy

Killeen sees high tenant turnover. Fort Cavazos drives shorter rental cycles, and the duplex market here runs more 12 month leases than 24 month leases. Use 7% for vacancy and turnover. That removes $2,100 from the top line.

Effective gross income: $27,900.

Line 3: Property taxes

Bell County tax bills for similar 2 unit properties in this zip code run between 2.2% and 2.4% of assessed value. Texas reassesses after a sale, so next year's tax bill will be calculated on something closer to the purchase price, not the seller's current $185,000 assessment.

At 2.3% of $245,000, that is $5,635 a year.

This is the line where Texas duplex deals quietly come apart. The seller's quoted "$4,200 in taxes" is a number tied to their assessment, not the buyer's. Pull the assessor's site, run the reset, plan for the new bill.

Line 4: Insurance

A landlord policy on a 1986 brick duplex in Bell County runs as high as 2% of dwelling value annually with current Texas weather pricing. Central Texas hail risk keeps these numbers elevated, and policies priced below that often come with a deductible walked up to 2% of dwelling value too.

At 2% of $245,000: $4,900.

This is the line that has moved the most in five years. The old rule of thumb of "about $1,500 a year on a duplex" is gone in this part of Texas. Quote a real policy before underwriting the deal.

Line 5: Property management

Killeen has a deep property management market. Going rate is 9% to 10% of collected rent, plus a half month leasing fee on turns.

Use 9% of collected. 9% of $27,900 is $2,511.

Count it even if the plan is to self-manage. Self-management is a job, not a free input. A deal that only works because the owner is doing unpaid labor is a thinner deal than the spreadsheet shows.

Line 6: Maintenance and repairs

Ongoing service calls and small fixes on a 40 year old building. 7% to 10% of gross income is reasonable for property of this age. Use 8% of collected.

8% of $27,900 is $2,232 a year.

Line 7: CapEx reserves

The big replacements. Roof has 7 to 12 years left depending on the next bad hail year. HVAC condensers look 10 plus years old in the photos. Original kitchens. Water heaters unknown.

Reserve 8% of collected. Another $2,232 a year, sitting in a separate account so the cash is there when the AC quits in July.

This is the line beginners cut to make a deal pencil. It is also the line that decides whether the property funds its own future repairs or hands the next owner a $9,000 surprise.

Operating expense total

Adding it up:

• Property taxes: $5,635
• Insurance: $4,900
• Property management: $2,511
• Maintenance: $2,232
• CapEx reserves: $2,232
• Total operating expenses: $17,510

That is 58.4% of gross rent. On the high end of what experienced operators expect on a property of this age and class, driven by Texas hail-belt insurance pricing and the post-sale tax reset. The cute 35% operating expense ratios in podcast examples come from newer, nicer buildings in cheaper insurance markets. This is the real number.

Net operating income

Effective gross income of $27,900 minus operating expenses of $17,510 leaves $10,390 in net operating income.

Cap rate on the $245,000 asking price: 4.24%. That is what the property earns at the price, before any financing.

Debt service and cash flow

Annual debt service: $14,664.

Cash flow: $10,390 minus $14,664 equals negative $4,274 a year. About $356 a month, out of pocket.

Cash-on-cash return on $70,750 invested: negative.

The property looks fine from the curb. The rents are real. The seller will tell you about the strong rental market and the new HEB nearby. The math says a buyer puts $70,000 of capital in to lose about $350 a month and hope appreciation and amortization make up the difference over years.

The verdict

Pass at $245,000.

Could a buyer reach for it anyway? Yes. Investors do, all the time. A few honest reasons it might still be a buy for someone else:

• A lower rate. At 6.0% instead of 7.0%, debt service drops by about $1,400 a year, but the deal still bleeds roughly $2,800 annually. Rates would need to fall closer to 4% for this property to break even on financing alone. That is not a 2026 conversation.
• A heavier down payment. 50% down instead of 25% cuts debt service to about $9,775 a year, and cash flow lifts to about $615 a year, or $51 a month. The return on the extra $61,250 of capital is just 1% — a money-market account beats it. That is a personal-balance-sheet decision, not a deal-quality decision.
• A real value-add. If $15,000 of cosmetic work supports $1,400 per side, the rent picture changes and the math shifts. Run it as its own scenario, with a defensible after-rehab rent.

Take all of those off the table, stand on the deal as listed, financed conventionally at market rates, and the answer is no.

The price it works at

For this property to produce a modest 6% to 7% cash-on-cash at 25% down and a 7% rate, the purchase price needs to be around $170,000.

Quick check at $170,000:

• 25% down: $42,500
• Loan: $127,500 at 7%, annual debt service about $10,180
• Taxes at $170,000: about $3,910
• Insurance at 2% of $170,000: $3,400
• Other operating lines unchanged
• New operating expenses: $3,910 + $3,400 + $2,511 + $2,232 + $2,232 = $14,285
• NOI: $30,000 − $2,100 vacancy − $14,285 expenses = $13,615
• Cash flow: $13,615 − $10,180 = $3,435 a year
• All-in cash: $42,500 + $4,500 + $5,000 = $52,000
• Cash-on-cash: 6.6%

That is the kind of return that compensates a buyer for the work of owning the property and the risk of a high-turnover market.

Will the seller take $170,000 on a $245,000 list? Probably not today, on a 41 day market with one cut already in. Maybe in 60 days. Maybe after the next cut. Maybe never. The offer is what the property is worth as a rental at current rates. That is the only number worth standing on.

The three things this listing teaches

1. The seller's tax bill is not the buyer's tax bill. Texas reassesses on sale. Plan on the new number.
2. Nearly 60% operating expenses is what to expect on a 40 year old duplex in a hail-belt insurance market. The 35% ratios in podcast examples come from a different kind of property in a different state.
3. At current rates, the price the seller wants and the price the property is worth as a rental are two different numbers. The market closes that gap eventually, or it does not. The buyer's job is to refuse to close it for them.

A word on the workflow

The 11 lines above are the lines every investor runs, every time. The math takes a few minutes once the inputs are gathered. The inputs are the slow part: pulling rent comps, the assessor's site, an insurance quote, the management rate, and a fair read on age and condition. That is the hour of busywork that stands between a listing and a verdict.

Whoof is built to shorten that hour. The verdict still belongs to the investor; the work that gets the investor to the verdict gets shorter.

Try Whoof on a property already on your list this week and see how the first pass changes.

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Investing in real estate involves risk. The property, prices, rents, taxes, insurance, and rates above are illustrative for a clearly-labeled composite in Killeen, Texas, drawn from current market norms. Nothing in this post is a forecast or a guarantee. Run your own diligence on any deal before committing capital.