Updated over 6 years ago on . Most recent reply
[Calc Review] Help me analyze this deal
*This link comes directly from our calculators, based on information input by the member who posted.
Hi Biggerpockets community!
My name is Geoffrey and I am excited to start my real estate journey! I am currently looking for a duplex to do house hacking.
I found this house that interests me.
Feature of this house:
- Finished basement (1 bedroom and private bathroom)
- 1st Level (2 bedroom and 1 bathroom)
- 2nd Level (2 bedrooms and 1 bathroom, there is a potential to convert the living room into a 3rd bedroom)
My assumption:
- I did not include the potential rental for the basement room which I will explain below.
- I assume tenants will pay for utilities, so I in my monthly expenses, I only include $120 for insurance and $200+ for taxes.
The reason why I did not include the basement room into my calculation is because I am not sure how to rent this out. Based on the layout of the house, I might be able to turn this house into a triplex (where the basement room can be its own studio). They have cabinets down there and space that I might be able to turn into a kitchen down the road. However, this house only has 1 common room for laundry. My second option is to rent the lower unit as 3 bedrooms and 2 baths and 2 bedrooms and 1 bath for the upper unit with common laundry space for both. (I assume $850/month for each unit, total $1700 in rent per month)
The upper unit requires some TLC (either refinish the wood floor or just put a new laminated wood on top). Assuming that I am only renewing the floor, I put $5k as my budget (including labors and materials). Currently, the central room can potentially be converted into a room (it has closet inside there, the room only needs a door). However, if I do this, the upper unit will have limited space for the dining room (right in front of the range and fridge).
I have attached as many pictures as I could, so that it will help all of you to visualize what is the house look like.
What do you guys think about the analysis? Maybe I am too lenient on certain things? Or maybe the way I look at this house is completely wrong? I would love to hear any opinions from the community!
Thank you for all of your help and time beforehand!
Most Popular Reply
That's a great question, but unfortunately, the answer is that it depends. I have one mentor who won't touch a property unless the CoCROI is close to 30-33%, then I have another mentor who is happy to get close to 15-20% in today's market. I'd say it all depends on your risk tolerance, market, and goals. Obviously the higher the CoCROI the better, but at some point you have to determine what is "good enough" for you, and dive in.
Robert Leonard