House hack analysis for an A property

[Amy Jo Holweger]

I’m looking at an off market deal I was informed of. A property - well kept in a nice neighborhood. It’s a duplex valued around $380,000. It has a 2 bed 1.75 bath 1200 sf on each side with rent $1400-1700 per side. The owner currently lives in it so we’d be taking her place and living in it as a house hack. It has a big backyard with a large shop in back, and that could possibly be rented as well. Property taxes estimated at $3900 a year.

The property is located north of Seattle, so it’s hard to find properties that meet the rules of thumb people commonly talk about. For this neighborhood I’m hoping for a cap of 4-5%.

The thing is we are new investors. We have only 15k in savings right now, own a condo we want to get out of, and no debt otherwise and excellent credit. We make about 120k a year combined so qualifying shouldn't be an issue. We currently pay $1600 combined with mortgage, PMI, taxes, and HOAs.

The idea is that we would try for a zero down loan with a lender we are in contact with. This means a substantially bigger mortgage obviously.

So should we move forward with it and take less in cash flow now because we will live in it and overall it will save us a good chunk of money every month? Then when we move, we could refinance to get to 20% equity and no longer pay PMI. Would it be a good investment then when we move and it's entirely a rental?