Dallas SFR House Hack Analysis

[Jerry Thompson]

Hey Everyone! I'm running the numbers on my first property in the Dallas area and figured I'd try and get some feedback on my approach and numbers. This will be a house hack, with 10% down and I'll rent a room in the house to offset some of the debt service. I'm running my numbers on renting out the full home when I leave (in about a year) so until then, I'll be building equity and making small improvements to the home. I don't have any budget for rehab at the moment so these homes are in livable shape now. Goal is to cashflow at least $100 on this first property after move out. I've been determining my offer price by looking at rental comps in the area and dividing that number by 0.015. Essentially I'm trying to make each offer a 1.5% deal for me- would definitely like some advice to see if that is a good way to approach it. I'm not counting on appreciation at all even though the areas I'm looking in are growing. The locations I've chosen are ideal for getting to work in under a half hour with traffic so I'm not planning on moving to the sticks where good deals may be easier to find :)

I've been using the BP rental calculator to help so here it goes:

Purchase Price: $80k

Rental Income: $1,200

Rehab: $0

Taxes: $1k

DownPayment: $8k

Loan Amount: $72k

Rate: 4%

Term: 30 yr, fixed

Utilities: $0 (renter will pay)

Insurance: $125

Vacancy: 7%

Repairs: 10%

CapEx: 10%

Property Management: 10% (will manage myself but that could change one day)

**Monthly Expense: ˜$1000

**Monthly Cashflow: ˜$200

COCROI: 18% (would have to be recalculated for any improvements I make to the home)

Would love to hear if there are any numbers/details I'm not including!

Hope I'm doing this right. As I keep doing analysis I'll see if it makes sense to change that 1.5% expectation if my other expense assumptions seem solid. Rents are also an estimate so I'm being cautious. My focus is to definitely cashflow after I move out. 

side note: a small multi family would be ideal but they market here is hot and I have no rehab budget.

Cheers and thanks!

[Andrew Herrig]

@Jerry Thompson Your analysis looks pretty good. Taxes seem a little low. If you have a homestead exemption, I usually assume 2.1%. Once it's a rental, more like 2.7%. 

Make sure you research the neighborhood and are comfortable with it. A house under $100k and at a 1.5% rent/price is a red flag for a potential war zone.