I'm a complete newbie from Minnesota and started my real estate journey in January 2023. I just signed up for pro last week. All the terms and strategies are a bit foreign to me and I feel like I'm drinking out of a firehose. I've been listening to podcasts, reading the forums/recommended books, and watching youtube videos to wrap my head around the concepts. The piece that I'm really struggling with is analyzing the deal. My goal is to get a duplex, triplex or quadplex in my local area with the hope of doing some cosmetic updates and BRRR. I've found a local investor-friendly real-estate agent from Bigger Pockets and they've set me up with a daily listing for property in my local area.

I'm still learning about doing the math and identifying deals, so I've been actively analyzing deals and I was hoping to get a second or third set of eyes on how to analyze this particular deal. I'm interested in this property because the seller is offering an assumable FHA loan at 2.25% for the $434 K and $115,900 at current interest rates. It's high considering the rising interest rates and it seems like it could be an opportunity to do creative financing so I'm thinking this is a hybrid of Sub-2 and maybe seller finance on balance ($115,900) and possibly on the down payment.

My questions are as follows:

1. Do I need to live in the property if this is a sub-2 on an FHA loan or do I just have to alleviate the owner concerns around all the risks such as the "Due on sale" clause and other owner concerns. I've got Pace Morby videos on replay. :)

2. Do I still include the closing costs in my calculations and would it be for the total amount or the owner financing piece only? How do I factor in the real estate agent commissions on both sides?

2. I'm not quite sure how to put this in the calculator to run the numbers so I tried the $434 K with my assumptions for the terms. To be conservative, I also put in the calculator a separate analysis with the non-FHA balance at 7% but did not include insurance, taxes, down payment, etc so that I wasn't double counting these items. Not sure if there is an easier way to do this or if I need to think about this differently or how to put this together.

3. I noticed there is opportunity to add appreciation by putting in a bathroom and a partition wall. Could this be turned into a triplex or how do I include that in my calculations? It looks like this would go into the rehabbing section and then I would increase the ARV, but not sure how to do that? I tried the rehab calculator and think that it could be around $25,000 but not sure about how to calculate this if i'm renting.

4. I calculated the rental rate at at about $3900. The rental calculator has low confidence for a rate of about $2,475 for 2 bed/1 bath, but when I look on the property listing, I see the owner has systematically reduced the rent rate from $2,100 to $$1,750 over six months before finally putting it on the market. Does this indicate that s/he is not able to get renters or the rate is too high. I know the neighborhood pretty well and it's a good area with low crime rates so I'm not sure why this is the case.

I could use some guidance and help to understand how to analyze and find gaps in my analysis and what else to consider. Thank you in advance for your help.

Minneapolis, Minnesota

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