House Hack - Is this a good deal?

[Lou Delricci]

Hello to everyone. This is my first post and I'm hoping for a little feedback. I'm currently looking at a 2800 sq ft triplex for $300k. It's in good condition with (2) 2 bedroom 1 bath apartments and (1) 1 bedroom 1 bath apartment. I plan on living in one of the 2 bedroom units and renting out the other two. The rent from the other two units is about $2000/month combined. The utilities are separately metered except for the heat which is oil. The taxes are $7k/yr and I can qualify for a FHA loan with 5% down. From what I gather the comps in the area are in the mid $300's but they are all SF dwellings with under 2k sq ft living area. Being I currently pay $1300/month for the apartment I live in now this seems like a winner. Any advice or input would be greatly appreciated!

[Mark Douglas]

@Lou Delricci  Congrats on taking the biggest step!  A couple things here, just food for thought:

- I'm house hacking/rehabbing a duplex currently, with both sides being 2bd/1ba.  If I had a property with different bedroom amounts, I'd live in the smallest space, in this case the one 1bd/1ba, and rent out both 2bd units.  One reason is a higher gross rent, and higher cash flow.  Another reason is that in some areas, a 1bd place takes a little longer to rent, and may have a higher turnover than a 2bd.  Totally subjective though, your area may be completely different.

- As far as the numbers go, I'd plug it into the BP renal calculator, and see what you're looking at

https://www.biggerpockets.com/buy-and-hold-calculator.  I didn't do it for this deal, but run the numbers and see if the result is acceptable for you.  Some investors try and shoot for a minimum amount of cash flow per door/unit.  If the cash flow after ALL expenses is $400/mo for example, you're looking at $133/door.  (Run the numbers with all 3 units rented.  For your personal household budgeting, just subtract living expenses by how much of the mortgage will be covered by the two units being rented.)  Overestimate expenses..don't be extreme, but overshoot a little.  Don't buy it if it doesn't meet your criteria, or if you don't think you can realistically cut expenses/increase income to make the number work.  Always more deals out there..

- https://www.rentometer.com/ is decent for getting a ballpark estimate for rent.  Craigslist is also ok.  I like to call a few property management companies in the area (most likely they'll have a few rentals close to your property) and ask them what the average rent is for a 2/1 or 1/1 in my area.  You have some wiggle room to adjust (i.e., Your property has central heat/air, and most in the area don't) but I would caution against going too much over the average market rates.  The market dictates the rents, landlords don't.

- This last one is just a criteria I wanted to include when I was shopping around, but everyone is different... For me, I wanted to be able to afford the entire mortgage payment in the worst-case event of all units being empty at the same time, or tenants not paying rent, etc.  I chose a property that met that criteria, and thankfully so!  I'm in the middle of rehabbing the duplex, and one side is temporarily vacant.  (Getting it listed today, actually lol)  But I'm comfortably paying the mortgage for this month because I planned ahead for just such a situation.  If you can swing the mortgage on the triplex, that may ease any hesitancies if you have any..I sure did! :)

Hope this helps!

Best,

-Mark