First Property Purchase / House hacking

[Nicole Carey]

My husband and I have been looking to purchase our first property. The goal is to house hack with an fha loan.  

There is a FSBO 4plex that we have our eye on. Wondering if someone would look over the numbers and give a little advice. How much cash flow would you like to see on a 4plex? We would be putting 3.5% down. The place *NEEDS* nothing. We would likely put some sweat equity into it and for our dogs, we'd add a fence. Do I have to calculate that part? Every place we looked at needs a fence.

Asking price is 430,000. Last seller purchased for $389,000 and had to do extensive excavations/renovations to waterproof the basement/added tank, added commercial gutters, waterproofing membrane, etc. We estimate minimum of $30k was spent on that but he did a good job. 

All units are currently being rented so we would have to move into the 1BR for a few months when that lease expires until the 3BR opens up in May since it is FHA and has to be owner occupied (within 60 days I believe?)

1BR: $875 (can easily get $1000)

1BR: $875 (can easily get $1000 and we are thinking about trying airbnb for one of the 1brs. We are in a vacation town and airbnb apartments are doing well here) 

2BR: $1200 (basement apartment. probably capped at $1200) 

3BR: $1700 (potential for raising to $2000) 

Two 1BRs renting at $875 (we think rent could easily be $1000-$1100) 

Taxes $9300 (ughh, Vermont) 

Insurance $1600 (might be a little more since we'd be owner occupied and current owner is not) 

Heat $1878 (current owner pays heat- place has new windows and new insulation in basement apartment. When we need new unit we could potentially split it up but for now it seems easiest to keep as is) 

Electricity $474

Rubbish $432

Snow removal $385 (we could do this ourselves and ideally want to negotiate his snow blower as part of the purchase!) 

Water/Sewer $820

*Notes* Seller has area for washer/dryer for all units to access and pays for electricity/water for that included. I think we could make some additional income by converting to coin op. 

Upsides//Reasons we like it: 

-Nice owner occupied unit- We are picky. We need a big yard for our dogs and this place has that. It's not as easy to find as you might think in this college town where most multi family/4plex buildings are as big as possible on lots to maximize rental units. We have passed up many multi families because the owner occupied unit wasn't just right for us. This one fits the bill. 

I'm wondering how to calculate and how much do you sacrifice numbers for something that just works really well for your situation? 

I used the bigger pockets calculator with an offer of $400,000 and estimated 7.86 cap rate, 83.19% cash on cash roi, and monthly cash flow of $831.91 with low rental estimates. 

Downsides: 

-Basement apartment 

-Heat is included (could be split up but I think it might make sense to wait until furnace goes as it is a little old) 

I'd love any input! Thanks!