First Deal, Owner Occupied

[Randall Justus]

I'm a veteran in Philadelphia looking to purchase a small multi-family home (owner occupy/house hack) for the first year to get started. I want this to be relevantly turnkey in order to get my feet wet and satisfy VA Funding. I have been looking into the numbers here for over a whole year now, but it doesn't seem to work.

Everything that I have read suggests that you should figure in 8-10% for property management, but every PM company wants 1 months rent + 8% (which I believe to be typical). When I factor in both the 8%/door monthly fee + 1 months rent (8.3% of the monthly rent, spread out over the course of the lease year), it equals 16.3%.

The other figures I am using are as follows:

Purchase price: $300K - $450K

Closing Costs: 5%

Insurance: Varies by deal

Property Taxes: Varies by deal

Gross Rent: Varies by deal

Vacancy: 8-10%

Maintenance Costs: 8-10%

Capex: 5%

Utilities: $0-$50/month, Varies by deal

My goals

1% Rule: A consideration, but not firm

2% Rule: Ha, not a chance here

50% Rule: A consideration, but not firm

CoC Return: 5%-8%

Cash Flow: $150/ month, total building not per door

Live in one unit: Live in one unit for a year, pay myself rent for education sake

My questions:

1) Why does BP and other sources suggest only 8-10%? Seems like that number is too low. I understand that you want to factor in PM as a potential exit strategy compared to self managing.

2) Am I over thinking this? I do this often so if I am, I would be curious how and why.

3) Is my overall approach of getting started incorrect? If so, I am open to any suggestions.

Many thanks in advance!!!