Hey Bigger Pockets!

I’m looking at my first property and it will be a buy and hold. It’s a 4-plex in a diserable area, and it will cash flow now and after upgrades (more on that later).  This is assuming I go with a conventional loan. 

Going with an FHA will put me at a cash flow disadvantage because of the PMI. List price is $310K (considered high for the area) and I am targeting a price of $285K (not interested in it too much above this) but the mortgage + PMI and PITI will leave me at about 0 cash flow each month (will break even after saving for expenses, which I estimate are about half of the rent). Rent would bring in $2,750/mo.

Also, if I went with FHA and had PMI I know I could refinance if I got my LTV below 78% but this might not be to my advantage since interest rates are increasing and multi family rates will be relatively high. I'm guessing 6-7% in a couple of years. I've calculated that id pay more with the refinance than just continuing to pay PMI.

Just to keep my options open, I've reached out to a friend who is an investor and we've worked out a deal where he could lend the 25% downpayment and I would pay him back over the span of 2.5 years at 10%. This would allow me to avoid PMI and the place would cash flow very well after the investor was paid off.

This gets to the other part of my dilemma and the reason for this post, which is to ask the community if they think I’d be borrowing too much.

Again, this will be my first property. I make a good wage as an engineer and work is stable and don’t really see that changing over this time frame.  It’s a newer gig for me and just finished paying off student loans so don’t have anything to contribute to the down payment. I’d use the amount I’ve been paying off my debt with (~$1,500/Mo) to pay off the investor, along with the cash flow from the property so that the agreement above was satisfied. 

I’ve lived on my current budget for several years (essentially living like a grad student) and know my living situation is comfortable enough and paying this amount is sustainable for me. 

So, is it considered too risky to borrow the downpayment of $~75,000 + interest and hustle paying it off in 2.5 years? 

The house has a brand new roof and is structurally in great shape. New wood floors and tile have been put in recently. It has stable tentants (retired/older folks) in a great area. If the current tenants move out I would rehab the place lightly (cabinets, some new hardware, paint, etc) and increase the rent. Rent is waaaaaaay under based on comparable rates this area. I live about 3 blocks away and am charged $1.10/sqft. I’ve done my due diligence and know this is a fair rate for the area.   We’re at the base of the mountains in ABQ on the hiking and biking trails (again, highly desirable area and virtually no crime). The current units are rented at under $0.8/sqft and my realtor agrees this is very low and can easily be increased.  

Just seems like it’s a good opportunity but I could also be missing something important. 

Thanks in advance!

Zach