Thoughts on this deal?

[Kris Bano]

Hi guys, I'm just starting out, will be moving to the area and was thinking of buying a duplex, or a fourplex in this case, living in one of the units, and renting out the other three.

https://www.zillow.com/homedet...

What do you think of this deal? Would it be worth it/profitable to rent out the other three units (1500-1800/ea), and live in one? Would appreciate some thoughts/ideas!

Thank you.

[Nathan Gesner]

It probably won't cash flow. Here's a guide that describes what good cash flow looks like and how to analyze a property.

https://www.biggerpockets.com/...

With this property, you'll need $250,000 down for a conventional mortgage and you'll finance around $900,000. Your monthly mortgage payment will be around $5,000. Rent income is $7,200 total. A wise investor will set aside approximately 10% for maintenance, 10% for vacancy, 10% for taxes, 10% for insurance, and 10% for capital expenditures.

Total income: $7,200

Mortgage: $5,100

10% maintenance: $720

10% vacancy: $720

10% taxes: $720

10% insurance: $720

Total expenses: $7,980

That's a negative cash flow of $680 per month and doesn't include property management. I don't see it as a wise investment. I would also point out we're in a peak market for sales and this property is probably over-priced. It sold for $320,000 in 2020.