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Updated over 7 years ago on . Most recent reply

User Stats

12
Posts
2
Votes
Cyle Lublin
  • Rental Property Investor
  • Westland, MI
2
Votes |
12
Posts

House Hacking (buying my first home)...help/suggestions

Cyle Lublin
  • Rental Property Investor
  • Westland, MI
Posted

First, I'm excited to be here and hopefully some you guys will have some good tips on helping me buy my first house! I'm from Belleville, MI and looking to purchase a multi-family in the Metro Detroit area.

Now, I need some input on a property I found that has potential and I'm wondering if it's worth it... here's the scenario:

  • Duplex near a trendy downtown area (Ferndale, MI) and it's listed for $225,000
  • The millage rate for a homestead is 55 and 73 for non-homestead, which would make taxes approximately $6200 (homestead) and $8100 (non-homestead) a year based on selling price divided by 2...I confirmed this pricing with the city.
  • I believe each unit is renting for $900 (rentometer indicates average rents for $1150)
  • Both units are leased until April 2018, which at that point I have to decide which unit I'd like and if the other tenant would like to renew.
  • I haven't seen the inside of the house but I'm not even going to look if the financials don't make any sense...I'm looking to spend about $1000 a month after all expenses are factored in (P&I, Taxes, Insurance, Utilities, Groceries)
  • I have an 800+ credit score and my original lease would be at 4.675% since it's an initial investment property...I'd look to refinance 30-60 days after moving in.

Someone, anyone please let me know what else I'm missing and any suggestions you have would be highly appreciated! Would it be a good idea to form an LLC when buying this property as well? I'm thinking that it would be for the sake of liability in case a tenant sues.

Most Popular Reply

User Stats

49
Posts
18
Votes
David McCracken
  • Rental Property Investor
  • Rochester Hills, MI
18
Votes |
49
Posts
David McCracken
  • Rental Property Investor
  • Rochester Hills, MI
Replied

I own a duplex in the area and I think I know the exact house you're talking about, over on Troy street.

Sellers are taking advantage of the market, and I'm of the opinion the upper/lower duplexes are priced out in Ferndale. I ran the numbers myself on that duplex and the cash flow looks negative to me (just like all the other duplexes in Ferndale right now).

I strongly suggest you create a spreadsheet so that you can crunch numbers quickly as you peruse through properties. It will safe you lots of time in the long run. It blows my mind when people buy investment properties without having a VERY good idea of how much money they will net. 

I'm not a fan of forming an LLC, especially if you only own one house. Your landlord insurance will have liability coverage, and if you're really worried you can up that as high as you like. Eventually when you buy more properties you should get a PUP (Personal Umbrella Policy) for even more liability coverage.

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