First time buyer and curious if my math is correct?

[David Brackney]

The basics:

4-plex containing 4-units consisting of 2BR & 1BA each.

Cost:  $265,000  /  Estimated mortgage w/ me paying water & sewer is $1,350

1% rule:  $2,650

Estimated Rent:  $700/mo (tenant pays lights & gas)

4-units x $700 = $2,800 (this is >= the 1% rule)

$2,800 (rent) - $1350 (mortgage) = $1450 cash flow

*If I house hack and live in the 4th apartment, then my cash flow is ($2100 - $1350 = $750)

Am I missing anything, or do the numbers make sense?  

[Brian Moore]

Hi David, you've got the basics down but there's a lot of additional expenses that can eat away at cashflow. You mentioned your mortgage payment of $1350 includes property tax but does it also include home insurance? Is your financing below 20% which would require PMI? Is the property in an HOA? Will the property need routine gardening? You'll want to account for maintenance and vacancy of maybe 5% each. You mentioned that you might live in one of the units so it sounds like you plan to manage the property on your own; if not, professional Property Management runs 8-10% of gross revenue. Note that 2bed/1baths will have moderate turnover so you might be paying a make ready costs (paint and carpet) of $500-2K per unit every 2-3 years. Hope this helps!