How to Analyze Owner Occupied SFH

[Kimberly Anderson]

Hi,

I may be over thinking this but I'd like to get some feedback. My husband and I are first time home buyers, using an FHA insured loan to purchase a 3/2 SFH in excellent condition in Tampa's Seminole Heights neighborhood. The plan is to live in the home for 1-2 years, then relocate for job/personal reasons and rent the home out. We've offered $198k on the home, paying the 3.5% down payment. My MLS research shows me that homes in the area are getting rents in the $1500-$1800 range. Based on my research of what has been leased in the neighborhood, I know we can get $1600/mo in rent. But when I'm plugging in the numbers on the BP Rent Calculator (assuming purchase price of $198k, 8% vacancy, 5% repairs, 5% property management), I'm getting a negative cash flow and a low purchase cap rate of 4.89%. But, am I looking at this too conservatively, considering that by the time we rent the home, we will already have equity of at least $13k from paying the mortgage from the year we lived in it? In others words, we will begin collecting rent at the start of year 2, when our mortgage amount will be lower. How (or should) I account for this?

Thanks!