Live in House for 2 Years and then Rent...Help Analyzing the Deal

2 Replies

Hello Biggerpocket Friends,

I am considering buying my Mom's house and living in it for 2 years and then renting it out after that. We are currently living in the house so we either need to find a new place to live or buy this one and move in two years so that we are closer to the school that my kids will be attending then.

The current numbers only give a ROI of around 6%, but I am wondering if the fact that I want to live in it for 2 years makes it worth doing? The house is in excellent shape and I have estimated the CAP the best I can. Any suggestions on how to make the numbers work? Refinance? Sell at a certain point?

Thank you in advance!

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

Using your numbers, it cash flows almost $300 a month.  One problem with using a %, is that number is very different depending on how much it is worth-so 6% on $50K vs $250K.  It is a good way to get into the housing market and seems to fit in with your plans.

How does the $1700 a month compare to what you’re paying now? You’re pretty much househacking, you need to live somewhere so you should look at it in comparison to your other options. If you’re paying close to that much rent now then it makes 1000% sense to buy this. If you’re renting for $1000 a month then the extra $700 more than offsets what equity you would be accruing. Does that make sense?

Also what is the house worth? Are you buying it at a discount or at market price? If at market price maybe try to get it 6-10% lower since your mom would be saving on closing costs (commissions) by selling to you vs someone else. And when you (eventually) go to sell it you’ll probably incur those closing costs.