Duplex analysis critique (house hacking in Seattle)

[Chester Knapp]

I am considering a purchase of a duplex as an owner occupier in a central Seattle neighborhood (limited by a commute to Redmond). I am a newbie, and would like a few more experienced eyes to look over the numbers and point out if I've missed something, whether the estimates are too conservative, or just conservative enough.

Here are the numbers:

• List Price: $605,000
• LTV: 85%
• Est. interest rate: 4%

• Upper Unit (2bd, 1ba, 1040sqft) $1,850
• Lower Unit (2bd, 1ba, 970sqft) $1,330
• Total income: $3,180

• Vacancy (@5%): $160
• Taxes: $345   (From county assessor)
• Insurance: $95  (Estimated)
• Maint (@1%): $500  (May be high, however house was build in 1901)
• Water/Sewer/Garb.: $150
• Total Expenses: $1250

• NOI: $1,930
• CAP: 3.9%
• Rent Multiplier: 16

• P&I: $2,435
• Cash flow: -$505

I estimate the rent's are low by about $200 to $300 in total - the lower unit seems particularly under-priced.  Offering and getting the property at ~$560k (possible, if unlikely), combined with getting rents up to market value, gets it extremely close to cash flow neutral (which looks like a lofty goal in Seattle - this 'deal' is par for the course for the other 5 recent sales I've analyzed in a similar way).

• Anything seem glaringly out of place with the numbers? (maint. seems high to me)
• Anything else that would be worth taking into consideration?
• Is this "deal" mediocre enough to wait for something better?
• Is looking for cash flow in Seattle a fools errand?

[Brian Fouts]

If I am looking at the numbers, it is a negative cash flowing rental right off the bat.  Usually a bad way to build a good portfolio.

Now, you mention something about Owner Occupier (Occupied?).  Are you planning on buying, living in one part of the duplex, and renting out the other?  Or airbnb the other side?  That could be an option depending on the numbers.  Reduce your current living expenses by having someone else (renter) chip in.  Many people get started in real estate by purchasing multiple bedroom properties, living in them, and then renting out to friends or roommates.