I just finished running the numbers on a duplex I'm looking at. My idea is that I want to purchase the property with an FHA loan (3.5% down), fix it up, and then live in one unit while renting the second unit. Once the original loan is seasoned enough, I want to refinance the property with a large enough loan that I can retrieve all (or at least most) of the money I invested. My results using the BiggerPockets BRRRR Calculator are below.
Normally, I would pay close attention to the top section which suggests a $708 monthly cashflow among other great info. However, if I'm going to live in one of the units, should I be more interested in whether or not the rent of the remaining unit can cover my monthly expenses? The local market suggests I can charge $1200/mo for that unit. This will cover my monthly expenses as shown above, allowing me to live there for free, AND give me $72.75/mo in profit (really $332.75/mo profit since I'll be managing the property). Am I looking at this correctly? Or is there a bigger picture I'm missing?
I would get a roommate too if you can tolerate it and make some cash. Or you could AirBNB a room in your unit. I do both.
Have you gotten insurance quotes and looked up the taxes? Also what % did you use for repairs, cap ex and vacancy?
I put in 5% each for vacancy, repairs, and cap ex. I did look up the county records for tax, but did not get am insurance quote yet.
I agree with @Jordan Moorhead about the roommate. Would they pay $500-$600? Then you could cover your utility bills and have some more money in your pocket. House hacking like this has worked so well for us. We quickly stashed enough money to purchase a second property and are looking at another right now (only 2 months after the last purchase). We're planning on eventually moving out of our house and renting the rooms (4/3) on AirBnB, while having someone we know live in the master at reduced rent ($350-$400/mo v. $500) to manage the AirBnB guests. Money adds up so fast when you're not paying your mortgage! Good luck to you. Even if you can't deal with a roommate, this is still a nice deal.
Having another room mate in my unit is a great idea. However, I already have 2 room mates in the form a wife and child. Haha. So, we're much more interested in just living without a mortgage payment through this deal. Additionally, I found out this morning that this property is eligible for USDA financing so we could save a few thousand dollars by buying it with 0% down.
@Jason Unrath looks good, if you like the area and the property I would buy it. Just verify your reno estimate and your insurance on that address. Looks like a great house hack, good luck!
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