[Calc Review] Help me analyze this deal

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

Hi Everyone, 

I wanted to get the forums to take on this deal I'm looking to move on. It's a triplex, each unit with 3bd 1 bath. The rents for a 3bd in the area are generally 1,300 - 1500+ (depending on renovations, utilities, etc.). This property is quite older; units still have an old-school wallpaper and generally look like one of those older houses, so I priced the rent according to and stayed on the conservative side of $1300. I'll be house-hacking this, so going in with an FHA 3.5% down loan. Since I don't mind having roommates, the numbers displayed are with me renting two of the rooms out in "my unit" at $400/room. I could do a little higher may be closer to the $500 side but keeping it conservative at $400/room. This property is located near a college and areas where young professionals work, so I'm comfortable with the room renting to decrease expenses. Beyond that, I've tried to keep my expenses on the higher side to look at worse case scenarios and being overall conservative (I hope). This summary is with me house-hacking it, and I'll include the exit strategy in the comment below of me not living in the house after I move on from it to look at both scenarios. 


Also, the asking price is currently $363K and I've priced it according to paying the asking price and no-negotiations. I would like to offer in the 340-350K range but sticking with the asking price as a worst-case scenario. My personal opinion is that it's a pretty solid deal, but as it will be my first rental, first property, and major leap into REI, I'm a little nervous and would like to get a fresh pair of eyes on this deal. Thank you in advance for your time and assessment. 

Here's the exit strategy - this is a part I'm not sure I did quite correctly as I would be living there first and leaving later down the line. I've put 10% for PM, but plan to manage it myself so would consider the 10% "salary" but use it for reinvestment into REI. I've also taken out PMI as I don't intend to leave unless I have enough equity to take PMI out. Another point, the rents are still remaining on the conservative side with no increase as I'm looking at the worst-case scenario. The area of the property this is in has seen great appreciation in the past couple of years 40% in the last two years and around 60% in the last 6 years. However, I'm not banking on appreciation or anything like that in my analysis and trying to stick to facts and conservative. Again, I appreciate the time in this assessment.

@Aaron Montague I would love to get your take on this. I've seen your posts and analysis before in the forums and found so much value in them. If you had the time to look through this analysis I would greatly appreciate it. Thank you!

@Syed Zafar

Initially this doesn't look like much of a deal, though it may be better than expected.  

Your line items and my questions:

Gas - $350/month is a LOT of money.  Can you get separate gas meters for each unit? Once that is done, make sure this expense is put on the tenants.  Almost every person is careful when the bills are in their name.

Maintenance and Cap Ex - I believe the combination of these numbers is too high. You have allocated more than $700/month. NOW if this place is old, beat up, huge, and you have no money I can see this being the right number.  You have already allocated 5k for repairs.  Does the place need significantly more than that? If no, I believe you'll be fine with $350/month for Maintenance + Cap Ex.

Electricity - Landlords are generally responsible for porch lights, stairway lights and the such. Do you have anything like that? Is there a 4th electric meter on the house?

Trash - You have $0.00 / month listed.  Is trash pickup handled by the town/city?

This deal, assuming the numbers are accurate, is a good/great house hack and should be a solid rental.  I believe you've over estimated the expenses in regards to Cap Ex + Maintenance.  You should be able to separate the gas bills.  I think there is at least $600 MORE in positive cash flow in this house than you have listed.

As a house hack this will be excellent.  I don't know how much you are paying now but I'll assume it is part of a place like this, so $500.  Using your numbers I believe this place will eliminate that $500 and put $500 into your pocket each month pre roommates.  Now add in 2 roommates at $400 each and I believe you should generate $1300 per month for yourself for living here.

Go Buy This House :)