# [Calc Review] Help me analyze this Philadelphia Multi-family deal

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Originally posted by @John M. :

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Is it going to be an owner occupied property? Otherwise you will not likely get 4.7 interest rate.

@John M. , numbers look a bit tight to me. ie. Not conservative enough to be sure of a "deal".

eg. Only 5% vacancy allowance? Only 8% for management? [ie. once you don't live there anymore].

Are you sure about ARV (and cost to get there)? And is just 10% (pro forma) discount, a real deal?

ie. As a "house hack", it'll likely take many years before you can refinance out of compulsory PMI premiums.

And as Lana already mentioned, 4.7 interest rates (with 30yr terms) won't happen for an investment loan.

But, if you might live there for the foreseeable future, I reckon it beats renting. [Subtract income accordingly]...

@John M. , also, have you considered a (rehab) 203K loan on top of your anticipated FHA loan, rather than using your own \$60k cash for the rehab? Then, if you could get that purchase price down by another 15%+, aah, you might be talking "deal" after all! Good luck...

Originally posted by @Lana Lee :
Originally posted by @John M.:

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Is it going to be an owner occupied property? Otherwise you will not likely get 4.7 interest rate.

Hi Lana, answer your questions that yes, it will most likely be owner occupied for the first year. But, I pursing  other options.  But for the time I would occupy it, I would I still would save on the rent that I am already paying.

How are you only putting 3.5% down? That seems like a very unlikely scenario. Do you already have financing in place?  Most investment property lenders require 20-25% down at a minimum.

@Brent Coombs: Thank you Brent.
Well, that has been one of my main questions.  What is a normal vacancy rate for West Philly.    But he  seemed to have pretty low vacancy.  What would you do for vacancy and management.  The property management companies that I have looked at in Philly charge 8%.  What you recommend for vacancy and management in Philadelphia?
No, a 10% (pro forma) discount, a real deal is not a screaming deal.  But I thought that it could cashflow.

Thank you for mentioning that  " it'll likely take many years before you can refinance out of compulsory PMI premiums." Yes, I was planning on a FHA loan, but I thought to put extra down from my salary to get out of the PMI.

@MichaelBadin Yes, I have pre approvals in place for FHA loan (and a conventional loan). That is how I could put down 3.5%. But, I have run the numbers for different loans.

I believe that if you get FHA you will have to pay PMI for the life of your loan. You will have to refinance into conventional loan after you pay out 20% only then your MPI can be erased
Originally posted by @John M. :
@Brent Coombs: Thank you Brent.
Well, that has been one of my main questions.  What is a normal vacancy rate for West Philly.    But he  seemed to have pretty low vacancy.  What would you do for vacancy and management.  The property management companies that I have looked at in Philly charge 8%.  What you recommend for vacancy and management in Philadelphia?
No, a 10% (pro forma) discount, a real deal is not a screaming deal.  But I thought that it could cashflow.

Thank you for mentioning that  " it'll likely take many years before you can refinance out of compulsory PMI premiums." Yes, I was planning on a FHA loan, but I thought to put extra down from my salary to get out of the PMI.

Conservative numbers usually allow 1 month vacancy per year (circa 8%). And afaik, even if ongoing PM costs are only 8%, they often/usually require the first month's leased income as part of their cost as well.

Regarding mandatory MPI, that's just another reason why you want to be buying as much "free" equity to begin with. ie. The better the bargain, the quicker you get to 20%+ equity, the quicker you can refinance out of the MPI-riddled loan.

But be aware, once you refinance into an investment loan, its higher interest rate will likely wipe out your MPI savings.

Or worse! Good luck...