I am looking into making my first purchase and was looking for some insight and assistance on my first venture.
I am in the process of trying to price a two-unit multi-family home with two bedrooms in each unit. The current list price is $65,000 and that is just the number I am basing most of my numbers off of. I figure that I will be able to get the seller down about 5-10% and that will slightly enhance my numbers, but for now I would like to stick with the $65,000.
I would like to occupy one of the units with a friend and rent the other out. I figure that I would be able to get about $700 for one unit and charge my friend about $250-300 a month as well.
I got with my lender and he ran some numbers for me. we came up with a total estimate of about $660 a month (seems a tad high to me, but it probably right). he said a loan we could use was an FHA with a seller's assist. I plan on living in it for a year or two, before moving into another property and eventually growing my portfolio.
I would like to make some money off of the renting of the property, even if it is not all that much. I do not want to drop the ball and mess up my first purchase, so please fell free to send me some suggestions or even rip my plan apart. Thank you!
$65,000 for a potential rent of $1400 is a good deal, as far as cash flow. If you're living there you're going to have to put up with this one deadbeat who never pays rent - YOU! On the other hand that deadbeat probably won't need to be evicted or cause any troubles.
$660 seems high. But a chunk of that is taxes and insurance. The P&I on a $65K loan at 5% for 30 years would be $348.93. You will have PMI with less than 20% down. And taxes and insurance.
Jon Holdman, Flying Phoenix LLC
You can't really expect to make too much money if you're going to be living there. You should run the numbers as if you are renting out both sides completely. You need to break down the numbers to get a better idea. The $660 the lender gave you included included taxes and insurance correct? Whats the principal and interest portion?
Thanks for the response! With me living there, I would not expect much at all, so I figure if I can make anything at all, it would be a solid start.
If I were to rent both sides of the property without me there, I'd probably be looking at about $1,400.
The P&I was estimated at $313.97
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