Quadruplex Deal Analysis - House Hacking for 1 Year

[Joseph Sasotona]

When you are analyzing a deal, do you always put 3-5% or more on CAPEX, Vacancy, and Repairs and Maintenance? My Current plan is to house hack and self manage this quadruplex. Do a 3.5% FHA loan, live in one unit for 1 year, and rent out the other 3. Currently, this property is fully occupied. 2 units are month to month, and 2 units have expiring leases at the end of Feb 2023.

I ran the numbers through the BP calculator.

Assumptions for first year:

1. I have done my due diligence on the condition of the property, no major repairs needed, every single unit is move in ready. But to be conservative, I am setting repairs and maintenance at 5% of monthly income.

2. CAPEX set at 0% for the first year

3. Vacancy set at 0% for the first year

4. 3 Units rented out, 1 unit occupied by myself (house hack)

At these current parameters for the first year: I am at $30/mo at 1.08% CoC ROI

Assumptions for second year:

1. I leave the property and have the 4th unit rented out

2. CAPEX set at 5% Vacancy at 5% and Repairs and Maintenance at 5%

My new cashflow for the 2nd year: $745/mo at 26.5% CoC ROI

Is this a viable plan / deal ? Would love to know your thoughts.