House Hack - should I go for it?

3 Replies

Hello investors! I'm embarking on my first deal! Yay!

A property came up last night...

2 houses on .75 acres. A 3/3 with storage and 2 car garage, and a 1/1 with potential to add a second bedroom. 

According to the agent the property is in good shape. Seller just dropped the price $25k. Might be best deal in this shape for under $500k with potential cash flow.

PITI is $2,573. 3/3 house comps rent for $2300-2600. 1/1 house comps rent for $1200.

This is a house hack - no money down (VA loan), so we live in the 1/1 and rent the 3/3. When we rent the 3/3, and live in the 1/1 we will pay out of pocket $575 (after saving &300 per month for capital expenses and potential vacancies). Once both are rented (after 1 year requirement for us to stay there under VA loan), positive cash flow is about $475 (after saving $455 per month for capital expenses and potential vacancies.}

My only hesitations are:

1 - This is my first deal, I'm nervous!

2 - When we get the property, it will be empty. A family is living in it now, and will all move out after closing. That's leaves me to find someone who can pay rent at $2,300 which seems like a lot to me. 

Should I go for it? Thanks for the advice!!!!

Ladel,

Congratulations of finding a deal and jumping in.  I'd go for it if:

-You're sure it can rent for those numbers.

-You feel good about the area and chances for appreciation (no crystal balls, but if signs are there).

-You don't have serious rehab $s to get rent ready (you didn't mention).

-You have some cash saved to weather a possible 3 months of no renters (or worse, first renters don't pay and you have to evict).

Good Luck!

Chris

Ladell.......Keep it simple.......Base the numbers at a minimum of the 1% rule if it was filled with paying tenants in both units.

Thanks fellas!

Chris let me reply to you - 

1 - I need to verify rents, but all I know about is Rentometer.com

2 - I don't know how to check appreciation. If you mean housing prices are going to remain stable/increase, it seems that way. Lots of people are moving here. 

3 - I'm doing a walk through tomorrow, so I'll find out about rehab $. 

4 a I can weather a month, but not three...