[Calc Review] Help me analyze this deal

9 Replies

I am looking at a multi family in cincinnati and I am debating "house hacking" one of the units  while we renovate it to get better financing or just running it as a rental. Obviously by losing a full units rent, the numbers are now low but are still in the positive. How do you calculate the value of not having a mortgage? 

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*This link comes directly from our calculators, based on information input by the member who posted.

Making money while you live in your own house?  Pretty awesome.  That's how I got started too.  Living in a unit in my 5 unit building on the east side of Cincinnati.  Your financing terms will be much better as an owner occupant and you'll most likely be able to lock into fixed rate long term financing.  

@Joshua Herald

Is the attached analysis only considering rent from one unit, or from both? I am assuming you ran this analysis with $2100 being the gross rent from both units. 

I am currently house-hacking a duplex, and looking to house-hack another small 2-4 unit MF. When I run my numbers on prospect deals, I run them as if I were purchasing it as a pure rental/investment property. As long as it makes sense as an investment property, meaning, I am hitting my personal cash-flow and ROI goals while covering all the expenses you have accounted for in your analysis, then it is a WIN, and I move forward with the deal. When I was looking for my first house-hack I had a big spreadsheet where I ran numbers for each property as a stand-alone investment property, me living in one unit, and then living in a unit and renting out a room or two if that was possible. Now, I just run the numbers as if it is an investment property for simplicity. I know that I will only occupy a unit for a limited time, and the house-hack is just a way to get more favorable rates, better loan terms, and elminate, or severely decrease my housing costs today.

I am sure there is someone on BP who has built some wild spreadsheet, or other model where you can actually calculate the value of no mortgage, but for me, as long as I am covering most, or all of my PITI while I am occupying a unit, and the deal works as a stand-alone investment deal, then I am done running numbers.

Hopefully that helps, and if not, maybe some other BP members can fill-in where I fell short.

Good luck!

Andrew Terrell

Originally posted by @Craig H. :

Making money while you live in your own house?  Pretty awesome.  That's how I got started too.  Living in a unit in my 5 unit building on the east side of Cincinnati.  Your financing terms will be much better as an owner occupant and you'll most likely be able to lock into fixed rate long term financing.  

 How would one go about finding a rehab with this type of funding? They won't usually go over appraisal amount. Private lending?

@Joshua Herald your financing numbers are way low. I don’t think there is any way you find this for less than 4.5%. And I presume it will get to 5 pretty quick unless you have great credit depending on area. Your mortgage insurance is low also. I also don’t see any upfront mi anywhere. Also, not sure how this would be set up from a utility perspective.

Even with all those things, living close to free sounds pretty good!

Originally posted by @Joshua Herald :
Originally posted by @Craig H.:

Making money while you live in your own house?  Pretty awesome.  That's how I got started too.  Living in a unit in my 5 unit building on the east side of Cincinnati.  Your financing terms will be much better as an owner occupant and you'll most likely be able to lock into fixed rate long term financing.  

 How would one go about finding a rehab with this type of funding? They won't usually go over appraisal amount. Private lending?

 If you go owner occupied the bank you go with may have a renovation loan you can take out as well or you could do private lending if a renovation loan is not an option for you.

@Craig H.  

Lets assume I secure private or hard money for the reno. Obviously I would want the reno completed asap to get out of the " not so good" terms. Could i get a new appraisal and then refinance to a traditional? I guess a lot like the BRRRR strategy?

Originally posted by @Joshua Herald :

@Craig H. 

Lets assume I secure private or hard money for the reno. Obviously I would want the reno completed asap to get out of the " not so good" terms. Could i get a new appraisal and then refinance to a traditional? I guess a lot like the BRRRR strategy?

 Yes.  On your numbers i would bump that rate up a little bit.  If you did find a lender with 4% right now let me know b/c that's awesome!