Deal Analysis:House Hack a 700k Home Purchased for 500k

[Taylor Cochran]

Hi BP Community, 

I have an opportunity to purchase my grandmother's home in a very nice Nashville neighborhood. Zillow estimates the home value to be between $679,000 - $792,000, but I would be able to purchase it between $500,000 and $525,000. Since this home is inherited by the family, I could purchase it with no or very low money down. This would be an owner occupied home which I would rent out the bottom floor for $1,750+, leaving me to cover the rest of the mortgage between $1,500 - $2,000. Exit strategy would be to gradually renovate the home (it could use some work but has a ton of potential for a longer term flip) and sell at the peak of the next market cycle, or live in this home long term. This home also has a ton of potential for short term rentals. Four bedrooms each have an exterior door leading to a patio. 

I'm a new investor looking for my first deal and a primary residence. I am wondering what the opportunity cost are, advantages to this deal, etc. This is a pretty big ticket item and seems like a my eggs would be in one basket, but the no money down portion could enable me to invest in other properties as well. My debt  to income would be pretty maxed out, but if I were to sell the home it seems the return could be pretty nice. 

Look forward to your thoughts!

Taylor

[Jason D.]

I would caution using Zillow as a tool to estimate ARV. Make sure the numbers are good before jumping in.