First House Hack: Analyzing the Deal

[Cayce Baierski]

Hello BP! I'm new to the Greater Chicago area and am in process of buying my first Duplex to house-hack. However, here are the pros/cons. Could use the expertise of this group to help me through this first househack purchase. Would just love at this point another set of eyes on these numbers and concerns to help me ask the right questions and make the right decision.

House 1: https://www.realtor.com/realestateandhomes-detail/...

Potential purchase price: $152,500

Down Payment (Conventional Loan* 20%): $30,500   *Would need to use a conventional loan because the property changed hands within the last 90 days

Unit 1: Vacant (potential income $1,050/month)

Unit 2: Vacant (potential income $1,050/month)

Total potential monthly income if both units are rented: $2,100

x50% for Expenses: $1,050

Monthly Payment/Interest Payment: $844

Total monthly Cashflow using 50% rule: $206

A couple cons at the moment are the initial zoning looks like it is for a single family home; however, my Realtor has request in to the city to check if there's been an adjustment to this. If it doesn't meet zoning for multifamily I would walk away. Second we were able to see knob and tube wiring when viewing the property. The current owner says they updated it all. My question is, should I have an inspector verify this. Or would it be better to get an electrician in there?

If this goes through, how soon should I start advertising for rental? Just listened to a BP Podcast where they started while the property was still going through closing procedures. Property is turnkey and would be ready to be rented right away. I will be looking through the forums for advise on marketing and screening tenants.

Appreciate all of you taking the time to have a look at this and give a newbie some guidance!

[Bob Okenwa]

Hi @Cayce Baierski,

A few things to point out:

1. Even if the home currently doesn't meet zoning, you may be able to apply for a variance on the property if it was there in its current state before the zoning had changed to single family.

2. If you are 100% sure you saw knob-and-tube in the place and the owner is lying about it, it'd make one ask what else are they trying to hide? With that being said, I'd get an inspector in there as an electrician would only look for the electrical problems while an inspector will look for all problems.

3. I guess it can't hurt to advertise early, as long as the property looks presentable to prospective tenants as to not have them ask for a lower rent or be turned off by a construction zone if the electrical needed to be updated or something else was found during inspection that needed to be addressed.