need help determining purchase price for 2 unit house hack

[Dan Gongora]

Good morning BP community, This is a lot to ask but can someone help me determine an offer price for this property? I've been using the rental property calculator and I think I'm Over thinking it. I also think I'm doing something wrong because the offer price I come up with is sometimes way less than what the properties are listed at. I think the offer price for this and similar properties should be around 110k but that seems really low. Property link: https://www.redfin.com/IL/East-Dundee/503-Barrington-Ave-60118/home/17027076 Couple details about financing: FHA LOAN 3.5% down House hack strategy. I will live in one of the units and rent the other out. Property details: 503 barrington Ave east Dundee List price 194,900 Taxes 5,227 2 units A. 2 beds 1 bath $900 a month B. 1 bed 1 bath. I will occupy Tenant only pays electric and gas what would be your offer price? And could you walk me through your numbers? Are you using the rental property calculator or since it's a house hack are you more focused with getting an accurate mortgage estimate and making sure that the rent covers it? Thank you so much BP community

[Jeff Dulla]

@Dan Gongora I am sure different people on BP have different philosophies on all of this but when you are talking about an o/o residential two unit, you can work the numbers all you want on income analysis to determine your purchase price. But ultimately, the figures have to fit a sales price that is dictated by comparative analysis. Because that is how the seller is pricing it (supply and demand) and that is how a residential loan appraisal will be structured.

It is possible that the numbers you are running on an income basis are leading you to $110,000 purchase price. But no seller in the world is going to take that price when they are listed at $195,000. 

What is the potential rental of the unit you would occupy? Once you have both rents broken out, how does that fair against the cost of the mortgage and all other budgeted expenses?