First Time Investor Looking for Numbers Advice

[Sam Twarek]

Hello!

This is my first post on the Bigger Pockets Forum, so the usual apologies if I'm posting this to the wrong place.

I'm looking to leave the rental world and start up a "house hack" where I can live in one part of a two-family home and manage the property while tenants help pick up the mortgage payment. 

I found a home that's on the upper side of my budget at $149K (my budget being $150K maximum). This place is just a block away from my current rental -- and I absolutely love my neighborhood in Cleveland, Ohio.

I've run the numbers below and am hoping that some might have some advice on if this seems like a smart choice.

HOUSE DETAILS

.07 Acres, Built 1890, Paved Driveway, Asphalt/Fiberlass Roof, Vinyl Exterior, 

Unit 1: 650 sqft, 1 bedroom

Unit 2: 1,200 sqft, 2 bedrooms

RUNNING THE NUMBERS

Total Rental Income: $1,900

Total Monthly Expenses: $1,730

Total Monthly Cashflow: $170

COC ROI: 6.1%

The house is in fairly good shape. It's a 2-bedroom first floor and 1-bedroom second floor house. From what I can tell, the most work involved will be sanding and staining the wooden floor in the immediate interior.

Normally, I'd shoot for something in a lower price range ($100-115K). However, the possibility of staying within my neighborhood is incredibly valuable to me. The neighborhood is in a years-strong renaissance with rent amounts rising and new development popping up often.

I hope I've given enough information for some advice. I'd appreciate any info or even something I might be forgetting.

Thanks!

[Account Closed]

I agree with @Cary F. that house-hacking is a great way to "leave the rental world," as you put it, or rather enter in from the other direction, as a landlord.... Getting help with paying the mortgage while living in an area that you love seems like a no-brainer.

Now- looking at your numbers, they are too aggregated to gauge how good of a deal this is. Can you break them down? It seems like you are reluctant to provide details, but it would be helpful to know how you get to the $1,730 monthly expenses or COC return, for example.

What you really want to ensure is that you set enough reserves aside to pay for repairs. Since it is an older structure, you are sure to have pretty regular maintenance (you say it is "in fairly good shape"- I assume it has not been fully renovated). Be sure to budget enough to cover big-ticket items (roof, HVAC, furnace) if necessary in the next few years. Make sure that you can cover the mortgage yourself if there is a gap in occupancy or your tenant does not pay for a while or you need to renovate or whatever. 

Bottom line is- if you are where you want to live, the building is sound and you are confident that you will be able to rent consistently, metrics like COC don't really matter. But your reserves do.