I'm looking to buy a duplex. It's my first investment property. I'm wanting to house hack it. The seller is extremely motivated, the purchase price is 240k, and I feel I can negotiate for at least 25,000 off the price . It is in a re-gentrifying, up-and-coming area of Houston called Eado. Which in some parts is a little rough, but there are 200k to 400k and above being built all over the area. The questions I have are the morgage payment will be 1260.00 month. The units rent for 850.00, which will make my part 410.00 is it still worth hacking? Also it sits across the street from a well established church. I know it's not a SFR, and most families aren't looking to purchase it long term as a Long term home. Should I steer clear of it considering the church, and a small industrial business on corner next door? Or negotiate the price further?
There’s not enough information to say if it’s a deal or not. I’m not an expert of East downtown but that price seems high to me from what I do know about the area. However, the longer you hold and live in the property, the more equity your likely to build.
@Bryan Barth Welcome to BP and congrats on looking into REI. The information you have given is not enough to make a sound decision but from what you have said I would not do it. IMO if I were going to house hack I would want my tenants/roommates to cover the mortgage completely so I don't have to worry about it. However if that is far less than what you are paying right now and you can see yourself living there, then it may be a good idea. There are plenty of other things to consider besides just the price and rent. The age and condition of the roof, HVAC and foundation are HUGE things that can make or break a deal so make sure you do your due diligence. I would also look and see who your typical tenant will be. You always want to buy properties that you can add value so see if you could repair or modernize anything to increase the rents. Good luck and trust your gut, be patient for the right deal instead of doing the wrong deal because you are so eager to do a deal ASAP.
Thanks Frank, Michael. I really appreciate all the advice. I realize I did not give a lot of information in that first forum post. Since then I have done more due diligence. I have not had a chance to go inside the property. But have seen the outside and it seems to be in great condition. After running rental comps yesterday my numbers were off. My offer for that property would be around 194 to 196k. Considering it will need HVAC, and a few modernizing updates. Rents in the area go for about $1.45 a square foot. Which means each part of the duplex would rent for around 1044.00. Which would leave me to cover about $126 spread. As I said before it’s an up-and-coming area Houston, and I see the property value going up in the next five years. It is significantly less than what I’m currently paying to rent. About $600 less.
What are your goals @Bryan Barth ? Lower monthly "rent" payments they may provide you some equity a few years down the road or a cash flowing property?