Planning to buy a townhouse in milpitas and rent out 2 bedrooms

[Sreenidhi S.]

I'm planning to buy my first property in milpitas near great mall. It a new construction and has 3 bed/2.5 bath. 

I plan to live in one of the rooms and rent out two others.  Property costs about 1mil and i expect 5k monthly expenses  (which includes mortgage, property tax and insurance and hoa). 
How should i run my numbers to make sure it is a good deal. 

I plan to charge 1.5k per room per month and will chip in the rest of the costs myself as i will be occupying one of the rooms. 

As a first time landlord, what are the things i should watch out for? 

I hear real estate market might cool off in 2 years, is it advisable to enter the market now? 

[Alex T.]

Your property tax estimate is wrong. It would be about $900 min. HOA seems ridiculously low. I assume this is dr Horton. Your realistic rents is as follows:

Master bed with one assigned parking for one person: $1400 to $1500.
Master bed with one assigned parking for two people: $1600 to $1800.

Small bedroom1 with assigned parking and shared bath for one person: $1100 to $1200

Small bedroom2 with no assigned parking and shared bath for one person: $900 to $1000.

In this job market vacancy is near zero. People are desperate for single rooms in good location. Milpitas bart area is the single best commuter location in Bay Area. Vta, bart and 237 and Montague Expressway.

Numbers based on rents from past 2 years running the exact same operation that you are planning. LOL!!! I don’t live there.

Pros: always broke even for me and made $100 to $200 cash flow.

Cons: bad tenant means you will lose sleep until tenant is evicted or issue resolved. Expect this if you are a newbie. Use an LLC to limit liabilities. Yes **** happened to me once. Do not even consider renting to friends or family. Do not consider anyone without stellar credit. Avoid less than 700 credits. Write solid lease, collect ID proof, income proof, application, just like apartments do things. Never compromise on screening.

Good Luck!