SFH tell me how the numbers look. (House Hack)

Rental Property Investor · Cleveland, OH · Member since 2019 · 150 posts · 47 votes

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Want to house hack . 3 beds 1 bath. Basement rent gone be $300. then the (2) room upstaris I was gone do room for rent for the price of $400 each.

Tell me how the numbers look.

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Jimmy LieuBusiness Member

Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes

Hi Ondrej,

I am looking to invest in the Columbus OH area - would love to connect.

Did you account for the cost it would take to make your property rent ready?

Also, with a FHA loan you will need to pay upfront MIP and monthly MIP because it's lower than 20% down.

Also, the rent to price ratio is over 2%. Are you sure the property doesn't need major rehabbing or is in a bad neighborhood?

[email protected]614-300-7535

Jimmy Lieu, Red 1 Realty4.9119 Reviews

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Jaysen Medhurst
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
6y
You've got a lot going on here, @Ondrej Brown, but this could make a good house hack.
Your loan assumptions are a little screwy.
- First off, you're only figuring a down payment of 1.6%. How are you managing that?
- Rate looks high for an owner-occupied property.
- You have "$1" under Loan Points. 1 Point is equal to 1% of the loan amount. Is that what you what you put under Loan Fees?
- Since you are putting down less than 20%, you will have PMI. Typically that's 0.75-1.5% of the loan amount/year. Talk to your lender.
- Do you have a lender lined up? Many don't like to write mortgages for less than $100k. If this is a typical price point in your area, there are likely lenders that serve that market, though.
As far as the rest of your analysis:
- Include a budget for initial repairs. There's always something!
- How confident are you in your rent assumptions? $400/month for a room in a $40k house sounds very expensive. What would a 1-bedroom apartment in your area rent for?
- Why no electric or gas in your expenses?
- Garbage looks expensive. Have you confirmed with the town?
- WiFi looks very cheap. Granted that I live in much more expensive area, but I pay 2X that at my personal residence.
- Insurance looks very high for a $40k property. Talk with a local insurance agent.
- What about lawn care and snow removal?
- Always include Management (10-12%) in your underwriting, even if you plan to self-manage at first.
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Ondrej Brown
OP
Rental Property Investor · Cleveland, OH · Member since 2019 · 150 posts · 47 votes
6y
@Jaysen Medhurst Thanks for the feed back to start off.
I close on this property in 12 days. Using a FHA loan putting down 3.5% and sorry I meant to put 1% on the loan points lol Yes I have a lender lined up.
The Cleveland Market is very cheap compare to other markets.
With the rent assumptions. is a 50/50 , I see rooms for rent in the area go low as $300- and high as $500. I have a close friend who wants to rent the basement for $300 month (12 month Lease). For the (3) rooms ofcourse I'm goingto live in one room then the other (2) I'm debating of Airbnb the other rooms or renting the (1) room & airbnb the other one for the weekend. Any ideas ?
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Jimmy LieuBusiness Member
Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
6y
Hi Ondrej,
I am looking to invest in the Columbus OH area - would love to connect.
Did you account for the cost it would take to make your property rent ready?
Also, with a FHA loan you will need to pay upfront MIP and monthly MIP because it's lower than 20% down.
Also, the rent to price ratio is over 2%. Are you sure the property doesn't need major rehabbing or is in a bad neighborhood?
[email protected]614-300-7535
Jimmy Lieu, Red 1 Realty4.9119 Reviews
Website View Page
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Jaysen Medhurst
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
6y
Sounds good, @Ondrej Brown. I don't know how much Air BnB traffic you're going to get with COVID-19 going on. It's one thing to rent an apartment and have it all to yourself. To just take a room in a house that is occupied by at least 2 other people...
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Mikael Winkler
Rental Property Investor · Columbus, OH · Member since 2015 · 344 posts · 258 votes
6y
@Ondrej Brown
Yeah, my only question would be the demand for rent-by-room at that price point. However, if you see demand in your market, then that's awesome. Funny I came across your post. I literally just listened to a BP podcast yesterday with a guest who does rent-by-room with more standard 12 month leases, not the short term AirBnB model. Show 392, I think. Maybe check it out.
He even goes as far as trying to preemptively predict the things roommates would have disagreements over - things like shelf space, cleaning, toiletry products etc. He pre-assigns shelf space for his tenants, has a cleaning service come in every few weeks, and even stocks his places with toilet paper! haha. Sure it cuts into his cashflow, but he's also making more in this model. It was definitely an interesting strategy to hear about.
Good luck!
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Ondrej Brown
OP
Rental Property Investor · Cleveland, OH · Member since 2019 · 150 posts · 47 votes
6y
@Jimmy Lieu Hey Jimmy lets definitely connect , the Midwest is the market to invest in.
Also the property is 100% rent ready. Those where my main requirements when fishing for my 1st one
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