Owner Occupy On Single Family 3 Unit Rental

[Dillon Thomas]

Greetings fellow BiggerPocket members, a year and a half ago I came across BiggerPockets.com while looking for my fifth room-mate sharing rental house and knew that I needed to start a plan to invest in real estate. I’ve listened to a few dozen podcasts and wondered around the forums a bit but for the last year and a half I have been looking at properties, attempting to punch numbers, speaking with realtors; basically I’m very green. However, my job has been moving me around and I am finally at the point where I’m tired of renting. I was told on June 1st I will be moving to Denver, Colorado to work full time. The company will put me in a hotel for up to 4 weeks and by then they expect for me have found a place to stay. So yesterday I started clicking the contact realtor button on some of the many online websites. A few minutes later I got contacted by a realtor who was very eager to work with me. Long story short, I told her what I was looking for and we came across one property that I do not want to pass up. So I’m here asking all of you out there reading this if I’m trying to make something work for the mere excitement to start earning equity, or might these numbers actually work?

Working with my realtor and lender, we came across a single family property listed for $450,000. I'm trying to do an FHA loan. I wanted to do multi-family, but then i was informed that there is a down payment assistance program that pays around 3%-5% for those who qualify. According to my lender, for me to qualify I have one option: My parents would help cosign so that I could reach the loan amount.

Here are some numbers:

Reduced Price: $429,900

FHA Loan: 3%

Expenses

Down Payment -$12,897.00

Taxes -$1,438.54

Closing Costs $2,705.00

Water -$120.00?

Sewage -$30.00?

Electrical -$250.00?

Vacancy $0.00?

Mortgage Insurance -$201.55

Principle -$2,082.03

Cap Ex $0.00>

Insurance -$500.00?

Initial -$10,192.00

Monthly -$3,183.58

Year 1 -$61,833.50

Year 2 -$51,641.50

Now I’m not great with exact numbers, and right here is shows I’m paying $3,183.58 a month for the mortgage, utilities, and insurance. The idea of buying a place rather than renting, is so that I could put the money on rent into my own property. Planning my move, I anticipated about $2,500 a month for a decent place. What’s great about this house is that it has an RV pad that I can rent out between $600 - $1,000 a month and a guest house that I was planning on living in while renting out the main house for around $2,200. That means if I can get those two units rented out, I could be pulling in almost $3,000 a month from rental income. Thus, I would be living virtually rent free, while my tenants would help me earn equity. My biggest worry is that I wouldn’t be able to rent out enough and that I wouldn’t be able to afford to live without collecting rent. Also, I plan on moving in another 14 months once this job is done. Should I wait, or jump on this?