New to analyzing deals .. Would you do this deal?

[Andrew G Martinez]

Good evening BP,

I am new to analyzing deals, I have put together this property and hope to learn if I am running numbers and assumptions correctly. Any advice, feedback is welcomed. Thank you

NOTE: Property List for $229,000 and is bank owned and I assumed $12,000 per unit for rehab.

Example A Rent 3 is $0 due to this being a house hack Strategy. Example B is with the unit rented out after One year.

EXAMPLE A: House Hacked

Address: 642 John Fitzgerald Kennedy Blvd, Bayonne, NJ 07002 Type: Multi-Family

** Unit Information ** 

Total Units: 3 

Total Square Footage: 0 

1 Unit: 3/1 (0 sq. ft., $1,500 Rent Per Month) 

1 Unit: 2/1 (0 sq. ft., $1,250 Rent Per Month) 

1 Unit: 2/1 (0 sq. ft., $0 Rent Per Month)

** Purchase & Rehab **

 Purchase Price: $265,000 ($0/sq. ft., $88,333/unit) 

After Repair Value: $325,000 

Purchase Costs: $7,950 

Rehab Costs: $0 

Down Payment: $9,275 

Total Cash Needed: $17,225

** Financing ** 

Loan Type: Amortizing

 Loan Amount: $255,725 

Loan to Value: 96.5% 

Loan Term: 30 Years 

Interest Rate: 5.25%

 Monthly Payment: $1,412

** Cash Flow (Monthly) ** 

Rent: $2,750 

Vacancy: -$275 (10%) 

Expenses: -$1,348 (54.5%)

NOI: $1,127 ($376/unit)

Mortgage Payment: -$1,412 

Cash Flow: -$285 (-$95/unit)

** Returns & Ratios **

 Cap Rate (Purchase): 5.1% 

Cap Rate (Market Value): 4.2% 

Cash on Cash Return: -19.9% 

Return on Investment: 243.2% 

Return on Equity: -4.1%

EXAMPLE B: All units rented

** Unit Information ** 

Total Units: 3 

Total Square Footage: 0 

1 Unit: 3/1 (0 sq. ft., $1,500 Rent Per Month) 

1 Unit: 2/1 (0 sq. ft., $1,250 Rent Per Month) 

1 Unit: 2/1 (0 sq. ft., $1,250 Rent Per Month)

** Purchase & Rehab **

 Purchase Price: $265,000 ($0/sq. ft., $88,333/unit) 

After Repair Value: $325,000 

Purchase Costs: $7,950 

Rehab Costs: $0 

Down Payment: $9,275 

Total Cash Needed: $17,225

** Financing ** 

Loan Type: Amortizing

 Loan Amount: $255,725

 Loan to Value: 96.5% 

Loan Term: 30 Years 

Interest Rate: 5.25% 

Monthly Payment: $1,412

** Cash Flow (Monthly) ** 

Rent: $4,000 

Vacancy: -$400 (10%) 

Expenses: -$1,648 (45.8%) 

NOI: $1,952 ($651/unit)

Mortgage Payment: -$1,412 

Cash Flow: $540 ($180/unit)

** Returns & Ratios ** 

Cap Rate (Purchase): 8.8% 

Cap Rate (Market Value): 7.2% 

Cash on Cash Return: 37.6% 

Return on Investment: 300.7% 

Return on Equity: 7.8%

[Andrew G Martinez]

@James Stevens , thank you for your response, I would be house hacking using a 203k loan during year 1 Example A and would move out to rent final unit in Example B.  Would I have to refinance to a conventional loan at this point? From my research I should be able to remain with the same mortgage after year one. 

Thanks