Am i crazy or is -$900 a month out of pocket still a great deal ?

[Jason M.]

spoke with my lender today and we agreed on allowing me to buy a multi-family home with a primary Resident Conventional loan using 10% down. of course, I would have to house hack the property the first year, meaning I would rent all units except one of the units " the one I would live in". So I've been analyzing every deal comparing the loan options between 10% down (Primary Residents) vs 25% down (Investment property).

 --bear with me I'm pretty new at this --

I found a 4 plex list for $600,000 roughly 6k closing. I plugged all the numbers into the Rental Property analyzer calculator, as modest as possible trying to determine what my unit would cost me after subtracting all other expansive, for example, 5% on Maintenance, vacancy, capital ex, and 11% management fees. that number is roughly $900 a month or $10,800 yearly that I would be responsible for. both scenarios look like this  

A) Primary Resident: 69k (10% down + closing) +10,800 = 80k the first year 

Vs

B) Investment Property: 159k (25% down +closing) - $4704 ( $392 monthly cash flow) = $154,296 first year 

I feel that option A is the better option in year 1, but I can not figure out a true representation moving forward after the house hack is done and I replace myself with a tenet? I tried simply subtracting 80k from the principle and running the Calculator over a 29-year mortgage, but that can't be it because that 80k includes expansive ( cap-ex, Management fees, ext,) that don't go to the principle.

any help is appreciated. thanks, y'all 

[Jon Kelly]

@Jason M. Your option A and B analysis just shows your cash output in year 1. That's not really helpful when it comes to making a decision. Most people will consider IRR, CoC return or monthly cash flow per unit so they can compare different opportunities.

In scenario B your monthly cash flow is $98/unit and CoC return is 3% ($4,704 / $159k). Does $98/unit and 3% CoC meet your goals? I'm sure you can find better deals out there.

Most people analyze a house-hack using numbers after you vacate the property. You can still assume 10% down, but you should add fair market rent for the unit you occupy.