Owner-occupied Triplex Analysis

[Nelson M.]

Hey everyone,

I wanted to post my analysis of this potential deal to see if I can get some input on it from the veterans in case I'm doing something wrong. This is a triplex I want to move into for about one year to satisfy FHA requirements and then I'd be looking for another triplex or quadplex to repeat the process.

Triplex (1 4BR and 2 2BR)

Asking price: 180k

Rents: 900 + 750 + 750 = 2,400 (Actual would be 1,650 because I'd be living in one unit)

PITI: 1,300

Other expenses breakdown: 

Utilities (15%): 360

Maintenance (10%): 240 

Vacancies (5%): 120

Self-managed (0%): 0

Total: 720

1650 - 1300 - 720 = (370)

I would begin showing a negative cashflow of ($4,440) for the first year, then after moving out, that number would go to:

2,400 - 1300 - 720 = 380 

(potentially more than $380 because the property is in good condition and there isn't really much to repair)

Meaning that after a down payment of $6,300 plus the $4,440 of negative cashflow I will lose the first year, that leaves me at $10,740 all-in. However, the 2nd year I would have a positive cashflow of $4,560 for the year, leaving me at a 42% ROC figure, which seems pretty enticing.

My hesitation to get into this deal stems from having to spend a whole year with negative cashflow, but I understand that sacrifices need to be made in this business, and especially when it comes to owner-occupied units. Would you recommend that I get into this deal? Or should I keep looking for a property that can still cashflow while only occupying one unit?

Thanks for your help! Any advice is appreciated.