Conundrum for the Knowledgeable

[Chafic El Amatoury]

Hey guys,

I'm a young starting RE entrepreneur, been studying and learning for years, and now I'm launching with a major Househack and would love some guidance. I just got approved for a 400k FHA loan, want to use it to its max because it will probbly be the cheapest I'll ever get (3.5% down) I just spent a few months looking and calling and analyzing and am currently looking at 2 deals:

- Deal #1: A 120 yr old gorgeous brick mansion, technically a 4 unit but it includes 14 bedrooms, current owner is renovating it and adding up to 16 bedrooms in it. He also has an entire sorority signed up with signed leases for the next school year starting this August (15 girls, 14 already signed) with me living in it (becoz FHA) it will start cashflowing 2100$/month , and it has HUGE potential for later as the basement can be redone to add units, same with a very very huge attic level, easily 3 or 4 more bedrooms, and there's an extra ADU/garage with a second story that can also be redone into smthg decent, all of these already have water and power set up to them.

Downside: Would have to live with 15 freaking 20 yr old girls (I'm a 31 yr old man), this property is 2,5 hours away from the cities (I'm in St Paul MN) or any major center of civilization, and all these improvements to add any units or rooms wld take laaarge sizeable investments I can't afford right now.

- Deal #2: Also Gorgeous large 4-unit Townhome in the heart of the cities. Each unit has 3 Bedrooms and 2,5 baths, and a 1 car garage. It was built in 2001, just had everything replaced and redone,very sizeable everything, it really is the perfect classic 4 unit townhome for house hacking.. current tenants are all Month-to-month, all but 1 have been there for 7+ years, 3 of them are section 8.

Downside: Property does NOT currently Cashflow with me living in it, however if section 8 tenants are raised up just to Current Market rents it will cashflow abt 300 easily, and if I rent by the room for a very conservative 600$/room it can go up to 1866$/month. There are a total of 12 bedrooms and 12 bathrooms so if i just bump it up to 650$/room we're immediately up to CF= 2388$, and this is without even considering AirBNBing some (or all) of them, or furnishing them or anything else to add value... Being as this is central in the Twin Cities and not in a far away college town, the demand is not the problem, just knowing to what extent it can rent to by the room.

Sorry about the long paragraph, I would love to know if someone has a seriously good way of knowing to what amount a room can rent for, and what I might be missing or not considering in this current choice. I have been all over Rentometer, Zillow, Craigslist, Roomies, all kinds of other posts or tools, but the resources for "by the bedroom" are not as precise or dependable, and I just don't feel confident enough about these would-be numbers to make a choice..

Feel free to voice any thoughts or useful advice, or point to any resource or hidden notion I'm missing that any experienced RE investor might be able to contribute :)

[Tim Swierczek]

@Chafic El Amatoury sounds ridiculous.  If you like that deal buy it as a non-owner occupied home.  For deal number 2 you need to search as a by the room enter would search.  Try FB marketplace, roomster.com, housinganywhere.com, and www.livesomewhere.com/umn

There are more issues to renting by the room, you need to deal with personal conflict and you must have a great well thought out lease.  I personally think you are overcomplicating your first deal.  Buy number 2, raise rents, and learn to be a landlord before you start getting too cute.  I know the podcasts make it seem like everyone should live rent-free but there is something to keeping it simple to start and learning the ropes before you take the hard stuff.