House Hacking A Four Plex.

[Dillon Beard]

Hi Folks, have have been attempting to get into a house hack for over 18 months. I read Scott trench’s book and want to remove a mortgage payment from my life. I have the opportunity to buy a 4plex in my area. Here are the Numbers: $335k asking price. 3 units currently occupied. Rents are $680 per unit. Average rents in the area are closer to $750-$800. I can only do about a 5% down payment on this and have some cash left over to breath with or about 16,000k. The 1% rule says that rents should be at $837.50 all four units in order to be a good investment. Which will be doable with some minor improvements. The 50% rule is way off because of how little I can put down. However if I buy this at this price I will only have about $100 to -150$ in profit. It will get rid of my mortgage. But if I have a vacancy I am back to paying a mortgage. If I can push rents of $795 it will cash flow about $250 a month. Which I would put all of it towards vacancies and capital expenditures and not touch it. Is this a good deal? I am not a risk adverse person and I am handy and good at managing a current single family home. I think this is my next step but would like to have more input on this.

[John Leavelle]

Howdy @Dillon Beard

There is a lot more information needed to give a decent analysis.  What is the Market Value of comparable sold properties?  What is the current condition?  How much repairs would you expect to bring it to like new condition?

Suggest you do a more accurate analysis using the BP Rental Calculator.  Post your results here.  Be sure to use the loan for the House Hack and analyze as if you are already moved out.

Depending on what the market comps are and your ARV you may need to lower the purchase price. Use current rents for the analysis. Do not expect rents higher than market rates.