Noticing when a deal is too good to be true

[Brandon F.]

Being 17, I know i cant start house hacking till I'm a little bit older and have some money for a 3.5% Down payment on an FHA loan. I am planning on living with my parents for a year after college while working a full time job in Finance. I have some questions and it may be early but i want to learn as much as I can!

How do you spot a deal that is too good to be true? I went into Trulia, the real estate app, and found some multifamily houses for sale. I crunched some numbers, added up the rents for the 3 units of the 4plex, and once i subtracted the estimated mortgage, the Cash flow was about $1,300!! I feel like I might be missing something, because when i listen to Biggerpockets and the stories that people share about their house hacks, they are super excited and say they are lucky if they can make $500 in cash flow every month. I've done this with a couple other properties and noticed that it was around the same thing. I added up the numbers and after 3 years of househacking + buying with conventional loans, I could be making $8,000 a month in passive income in 3 years! Again, this just sounds too good to be true, and I want to learn as much as I can before I am ready. I know that mistakes are a great way to learn, but minimizing simple calculations would be great. (In mortgage calculations I also took out HOA, Utilities, A month of not having a tenant, and $500 for repair safety).

Also, is it easy to find tenants for a property? I've heard that property managers are a great thing to have, but if I can hold off on one for a while then that would be great too, just so i can maximize my cash flow to get the snowball rolling.

I am not asking for a mentor, just some advice. So if anyone has any that has been in the game, I would greatly appreciate it! Thank you!

[Stone Jin]

@Brandon F. Right so at 3% interest rate borrowing 430K for 30 years. Your principle and interest is 1800. You PMI is another 100-125. Your taxes is $200-300. Your insurance is 100. I'm not sure what your HOA is but let's call it 100. Total would still 2300-2500. I understand low down payment loans and house hacking. I'm just saying your numbers look too rosy. We've been investing for over a decade and can tell you that most of the time it's murphy's law when it comes to investing. The rule of thumb you see on the forums is about 1/2 your rent is used for everything other than debt service. Day 1 you get 3000 for rent. 1500 goes to cover everything other than debt service. 1800 is your debt service and therefore negative 300. I'm not shooting down your deal but I'm just letting you know that the numbers presented do not make sense.