House Hack Deal Need Opinions/help/comments

4 Replies

I'm looking at a duplex property today.  Each unit has 1 bedroom and 1 bathroom.  Unit 1 get's $825 in rent (1st floor), and has all new floors and appliances.  Unit 2 (upstairs) also is 1 bedroom 1 bathroom & receives $650 rent, but could use new flooring and appliances, however, the tenant has been living upstairs for 13 years (section 8 tenant) so I don't plan on bothering them too much.  The total rent of the 2 properties is $1,475.  Here's a breakdown:

Rent: $1,475

PITI: $890

Water: tenant pays

Trash: tenant pays

Snow: tenant pays

electric: tenant pays

Gas: $80

Property management: $148/mo. (10%)

Vacancy: $74 (5%)

Repairs: $74 (5%)

CapEx: $103 (7% of GI)

 Monthly Cash Flow: $106

My question is: The home was built in 1896, however, it's in growing city and in a great location.  I know the numbers are tough to calculate for somebody in a different area, but I wanted to see what questions people had and concerns with the older property etc.  

Hello John, 

Unless there is significant upside potential in the long run and you plan to raise rents, this deal doesn't have a lot of meat on the bone. Being this old, do you know how long before you would need to replace the roof? If you drop to 10% vacancy which is usually the conservative estimate when running quick numbers, your cash flow would be wiped out. 

Do my numbers look legit?  I feel like I could have been very conservative.  Also, I could take out property management since I would be managing it long term. I just included it just in case something happened where I wouldn't be able to manage. However, I don't see that happening.