Would you take this deal?

[Michael Mahung]

Hoping to get feedback on a 4-unit house hack deal I'm considering.
It's an Estate Sale so there is limited info about the property.

List price: $339,900
Financing: 3.5% down at 6% (est)
Debt Service & Closing Costs: $22,100 (est)

Est PITI: $2570.75/mo
Est Utilities (owner pays heat): $500
Repairs: $100
Vacancy (10%): $325
Lawn/Snow Removal: $100
Trash/Water/Sewer: $150
Management/Capex (10%): $325

Total Expenses: $4,070.75/mo

2ba 1ba: (owner occupied) ~$1050 arv
1bd 1ba: $800  ~$900 arv
1ba 1ba: $775  ~$900 arv
3bd 1ba: $1450 ~$1650 arv
Garage Parking: $50
Coin Operated Laundry: $10

Total Income: $3,085/mo
Estimated ARV Income: $4500/mo

Monthly P/L: -$985.75
Estimated ARV P/L: $429.25

Other expenses:
Renovating units (kitchens, bathrooms)
Upgrading electricity 100w to 200w for 4 units.
Replacing Original Windows (approx 40)
Unknown Age of Roof (rubber) & Heater
Tuck Pointing ~5-10k

Any feedback about the numbers or the deal itself would be greatly appreciated - does this seem like a good deal?

[John Warren]

@Michael Mahung there is a lot of info we would need to help, but if this is in a good area then I would go for it. Normally a 4 unit will bring in more like $4500 per month in most Chicago neighborhoods once it is stabilized (assuming some 2 bed units and a garage). This means you can eventually refinance out of that FHA loan down the line which will make this thing a very strong cash flow property.

Your vacancy is likely a bit high based on most areas of Chicago. We run 5% internally, and on a 4 unit you might even just put down 1 unit's rent for the year (as that is likely the most you see in most years). 

Management is maybe something you don't need to run if you are living in the property. I know incoming are a bunch of sophisticated investors who will tell you to always run management, but if you are putting down 3.5% and living in the property, do you really think you are going to pay a manager? The answer is probably not! 

Like others have said, my big concern is whether you will even be able to use the FHA loan. This is missed a lot here in the forums, but sellers (and listing agents) hate FHA deals since they have a higher failure rate in terms of contracts falling apart. If you can get a quality 4 unit with an FHA loan that cash flows, do it.