Cash flow neutral single family?

2 Replies

So, I've got myself into a situation. I am in the final weeks of a contract to buy a single family house in my current town. I own 2 duplexes and this was intended to be my own place. However, now I may have a job opportunity 1.5 hours away, and I'm not going to commute that. Do I back out and loose $4000 in sunk deposit and closing costs, or do I stick with it and rent it out? Problem is, the numbers aren't that attractive.

It's a 15 year loan $950/mo PITI. I could see myself getting $1200/mo in rent. Monthly expenses, self-managed, $200-$300/mo. So I would be breaking even, conservatively down $100/mo not including the principal paydown aspect. If it was a 30 year loan, I would be looking at making maybe $100/mo after taxes not including the principal paydown.

I like the house, it would be a nice place to live when I'm financially independent, so the only saving grace is that it would be paid off in 15 years at the tenants' expense. I have 2 duplexes netting me about $1k/mo after taxes and expenses.

So coming at this not so much from an investor stand point, more of a practical small time investor/financial independence stand point, what advice do you have?

@Brendan L.

Hi Brendan, honestly, I would doubt you would even breakeven with a 15 year loan.

Also, we need more numbers on the 30 year loan (%, expense calculations, etc.).

Based off the limited info I could see, in my opinion, unless you get super accelerated appreciation, I would probably cut my losses and forfit the $.

Don’t forget, they are going to make you sign a document that says you will be living there for at least the next year. Signing that and not doing it is mortgage Fraud. 

You’d have to tell the bank you don’t plan to live there and pay the higher origination and interest rates and getting everything redone in time to close will be tough. (Your financials will change as you will have to show nw living costs.)

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