Duplex Analysis

[Amir B.]

Hello BP Community,

I found a deal near my work. It's a two bed/two bath duplex. Asking is $435,00. 

• Lot: 8,276 sqft
• Multi Family
• Built in 1950
• Price/sq ft: $194

Both units are vacant. So, no tenants in place. I am interested in house hacking, so I would live in one. I am using a FHA loan and according to the agent I can command rent around $1350 per month.

Here is the link to the property.

http://www.realtor.com/realestateandhomes-detail/4...

It's really a tough market for MFH's in this area. What do you guys think? Good investment? Please ask any questions.

Thank you. 

[Ken Badziak]

Assuming a 5% down payment for the FHA loan (one can go as low as 3.5% down, but my understanding is you can never get rid of PMI, even once your equity hits 20%, without refinancing) that's still going to leave you with a monthly mortgage payment of nearly $2500 (PITI). Your tenant would barely be covering half.

I'd personally be looking for a unit where the tenant covers as close to 100% of the expenses, but no less than 75%. But that's just my personal preference.

And that's before you start adding in repairs and vacancies and whatnot...