How to analyze a potential house hack deal?

Question

Hi family,

We are in the process of potentially entering into our first REI deal. It would be a house hack situation where we would live in the lower half of a duplex and rent out the top half.

Also we currently live in a home that we "own" that we would rent out in order to begin our journey into REI.

My question is: Is there a good way to analyze the deal where we are buying and living in a multi that would not collect the full rent potential? We will not be there forever maybe 2 years at the most then move on to our next hack or maybe our forever home.

(I may have figured this out as I am typing this, but I will still post this to get more views on the situation.)

BTW the numbers are as follows:

Duplex price:$235,000

Money down: Poss 0%-5% (11,750) with conventional financing at around 3.8%

Taxes: $939

Ins: approx. $1500

Top unit Rental: currently not rented but the potential is $750 for the area

Bottom: Future rental is potentially $1000

Anything else I missed please let me know thanks.

Rob Beland · Answer

One area you need to analyze is the cost of the renovations you are going to be doing. There is no point in doing any renovations if the property value is already maxed out. What is the projected cost of the renovations and the projected value after the renovations are complete? If you're talking minor cosmetics then likely it's not a big deal and maybe you will see some increase in monthly rent or at the very least, you will be able to attract a higher quality tenant. You also may want to consider a three or four family where you will have a little more involvement with management and maintenance but you will also see more cash flow and you are still able to get into the property with little to no money down depending on your situation.