Triplex purchase after divorce - First property

[Craig Joseph]

Life has thrown me few curveballs so I'm just making sure my rationale is good here...

I am currently under contract for an ~2000 sq ft (total) triplex that consists of a 1br/1ba separate unit (700 sq ft) and a duplex comprised of a 2br/1ba and 1br/1ba. My plan is to live in the 1/1 for a year or two until I find something more permanent for me. I just finalized a divorce at the beginning of July and received my equity out of the previous house. It is in the neighborhood where I want to set up roots, and inventory is non-existent. Location is St Petersburg FL approximately 1 mile south of downtown and the USF St Pete campus. This neighborhood is extremely desirable and the property is located 3 blocks from a large, useable beach park along Tampa Bay.

This will be my first rental. I am handy with anything but electrical and like domestic projects.

Units are currently rented @ $1200/mo for the 2/1, $950/mo for the 1/1, and $1025/mo for the 1/1 standalone. To be closer to market value, rent should be increased to $1300/mo for the 2/1, $1100/mo for the 1/1 and $1200/mo for the 1/1 standalone. It will take approximately $15k in upgrades to justify this increase.

Purchase price is $380k. Appraised at $385k. Property was off-market when my agent found it. I qualified for a 30 yr FHA loan with 3.5% down @ 2.75% with a $2k lender credit. PITI is estimated at $2205/mo including FHA PMI of ~$220/mo for the duration of the loan (unless refinanced). Current cash flow is $3175/mo. Once I move into the unit my immediate cash flow will be $2150 with projected cash flow of $2400/mo once upgrades are completed and $3600/mo once I eventually move out in a year or two. Total out of pocket to close is $18,000.

Inspection was fine. Structure is block on slab. The neighborhood is mixed single family and multi family, with this property located on a more multi-family dominated street.

I have good job security, $88k base pay with an additional $15k in bonuses last year. I max out my mega backdoor Roth and Roth IRA and currently have ~$125k in liquid capital. Current net worth is $325k. My car is paid off, I have no debt, and terms of my separation agreement provide $525/mo for 3 years from my ex.

Short of hurricanes, I believe property values will continue to appreciate in this area in the medium to long term. Inventory is currently non-existent, quality of life is extremely high, and I speculate that COVID will drive demand for northerners moving south to a place they can be outside year round.

This is only my second property purchase (first multi-family), so I just want to make sure I'm not overlooking anything.