Deal help: Hack my housing with this deal?
Hey all. I'm looking for a place to live in a new location, and am considering purchasing a duplex I've found that's FSBO. I originally looked for a property to buy for several months, then resolved to renting, but found this property and am thinking I can make it work as an owner occupied home and therefore low money down.
List: $295k
Desired Purchase Price: $270k (5% down with VA loan)
Rehab: $2k (paint only)
Monthly:
Rent: $3700 ($1850x2 after I leave)
PIT: $1637
Insurance: Estimating $225
Vacancy: $370
Management: $370
Maintenance/CapEx: $370
Utilities: $400
Snow removal: ?? May be able to pass to tenants
Total Expenses: $3,370
Est. profit: $330
Cash on Cash: 21% (Total out of pocket costs about $19,500)
Up front it looks like a no-brainer, but here's my slight hesitation. If I were to purchase this an investment property, with 25% down, it doesn't meet my criteria of 20% CoC returns (10.3% CoC). One of the tenants is also moving out soon and I don't need it to live in for 3 months, so I will have 3 months of one-sided vacancy immediately until I move in.
My alternative housing option would be to rent something slightly larger for about $2,000/mo. Since I will manage this property myself while I am living in one side, and do much of the maintenance myself, my costs will be significantly lower than what is mentioned above. I'm estimating that this house will save me about $1400/mo vs renting.
I'm also concerned my Maint/CapEx number of 10% is not going to be sufficient. The good thing is that all of the appliances are new within the last 5 years, laminate flooring and carpet within that same time frame, and a new boiler last year.
Thoughts?