[Calc Review] Help me analyze this deal
*This link comes directly from our calculators, based on information input by the member who posted.
Hey everyone, I wanted to get some opinions on this deal I am looking into getting into. It would be my first deal and I would house hack it. I plan to use an FHA 203k loan to purchase the property. The property itself is a 5 bedroom / 2.5 bath SFR with an unfinished apartment in the back that is an addition. The single family front house is currently fully rented to 5 tenants renting out the bedrooms, it brings in $2,200 per month in rent. If I acquire it, ideally I'd get those tenants on longer leases in order for some stability, or increase the rent. I would live in the unfinished apartment in the back (after its completed of course). A contractor gave me an estimate of $75-$85k to finish out the apartment. The property has sat on the market since January 2017-November 2017, then they took it off the market and put it back on in March 2018 for $203K. I offered $130K for it due to the fact that it has sat so long and has never got an offer and the owner lives in another state. They countered at $195K (understandable) but that's still too high for me. I countered at $145K, they didn't take that either though. So I'm considering going to $160K. The listing agent says the seller owes more than $130k on the property and has invested a lot into the framing/concrete of the back apartment, so apparently that's why he didn't take the low ball offer. I have a number I'd like to stay within (purchase + rehab costs .. rehab is rolled into the mortgage with a 203k loan) in order to only have to come out of pocket a certain amount each month. Also, I think the property would be a great rental property after I move out of it because the finished apartment could bring in at least an additional $700-$800 per month. Additionally, it's in an appreciating neighborhood that is turning right now. In 5 years it will likely be a hot neighborhood that's close to downtown.
What do you all think of the numbers? I ran them very conservatively. Max purchase price = $250K ($165K purchase + $85K rehab), 5.5% interest rate, higher property tax rate, and current rental income. The cash flow is about -$500 but that's a lot better than what I pay in rent right now ($1,200). As David Greene said one of his biggest mistakes was, I don't want to confuse being scared with being conservative. I could potentially end up losing out on a ton of money by not purchasing it, as opposed to what I think I'm saving by not getting into the deal. Or I could be wrong and it could be a bad deal. Any advice/tips are appreciated.
Thanks!