Newbie analyzing a deal

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Hi Everyone,

I am a newbie and I'm looking to get into my first deal. I currently live in Irvine, CA paying $1,630 a month plus utilities (about $100) for a 1 bed, 1 bath apartment, which is pretty cheap in this area. My job is about 30 minutes away. I have been analyzing deals for the last 6 months and I think I finally found one that makes sense but I would like to know what you guys think!

The property is a triplex located about an hour and a half away from my work. I plan on house hacking for the first two years. This would mean I would probably be waking up really early to miss traffic everyday, which I don't mind.

Below are the facts:

Listing Price $430,000 but I would offer around $400,000

3.5% down payment ($14,000)

Mortgage would be around $1890 with PMI included

Current Rents are $1,000, $950 and $1,050 ( I would live in the one that rents out for $950 and rent the other two)

I am budgeting $300 a month for repairs and maintenance, $300 for cap ex, and $150 for vacancy. This is 10%, 10% and 5% of total gross monthly rents, respectively. I plan on managing this myself so I didn't budget for property management fees.

Insurance would be around $150 a month and I am budgeting $100 for my own utilities. The tenants would pay their own utilities.

Summary:

I am thinking I would need about $19,000 cash up front for the down payment and closing costs. I am assuming the property doesn't need major repairs but I haven't walked through it yet.

If I house hack, I would be paying about $297.40 a month with utilities included. I would also be putting aside the $750 I mentioned above for repairs, cap ex and vacancy. So technically the total would be about $1,047.40.

The deal seems good to me but I have talked to a few people (who don't know much about investing) and they're telling me to be careful. This would be my first deal so I am a little scared but by looking at the numbers this deal seems very good to me especially since I am paying $1,630 right now. The only negative part about this is the long commute. What do you guys think?

Thank you in advance!

[Anna Smith]

I haven't personally house hacked, but it sounds like you are on the right and starting early. Good luck!