Analyzing Multifamily properties - Living in one, rent out the others

8 Replies

Morning BP Community,

I am on the hunt for my first multifamily property deal, I want to get an FHA to finance the property, live in one unit and rent out the other(s).

As I am analyzing figures for all different properties here is the question I have:

When calculating the income for a MF property, for example a duplex where I will live in one unit and rent out the other, does it make sense in my analysis to include the income from both units as part of the property's income? Or should I only include the unit that will be rented?

My gut feeling is to count the income for both units, but I want to get some feedback from BP. What do you guys think?

Thanks,

Mike

@John Cohen

At least for the required 1 year, and then depending on how things are going stay for 2, or move on to my second MF unit. I've heard of situations where people did another FHA, which is worth looking into.
But I agree with your comment on using the rent to show higher NOI, otherwise it can be a little misleading in terms of the property's overall value, couldn't it? If I do consider both units' rent, then once I moved out I will know what kind of cash flow it will produce when both units are rented.

Thanks John

@Joe Fairless

I am looking at NOI for the property:

When considering only one unit's income I see the NOI for one, clearly.
When I consider both units' rent I at least get a better idea of what the property's real value is, in terms of it's potential income.

So I was wondering if I should be including the income from two units or just one unit - but this was for my personal analysis

You mentioned showing this to a lender - so lenders are more interested in seeing your level of debt-income, expenses, rather than the quality of the property?

Thanks

@John Cohen

Thanks John. That's the plan, because I won't be living there forever, so I still need to look at what it could potentially bring in, ya know.

@John Cohen @Joe Fairless

   Do you think a lender will think that's pointless for me to show them all incomes, since I will be living in the one unit?

Originally posted by @Mike DeLeo :

@Joe Fairless

I am looking at NOI for the property:

When considering only one unit's income I see the NOI for one, clearly.
When I consider both units' rent I at least get a better idea of what the property's real value is, in terms of it's potential income.

So I was wondering if I should be including the income from two units or just one unit - but this was for my personal analysis

You mentioned showing this to a lender - so lenders are more interested in seeing your level of debt-income, expenses, rather than the quality of the property?

Thanks

 Yes on a 2-4 unit the lender is more interested in your personal finances than the property although they take all info into account. 

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