Analyzing a SFH House Hack in Central IL

[Inga Fonder]

I looked at a single story 4/2 ranch style home with a garage that is currently listed at $89.9k, and was originally listed at $100k. The house was built in 1978 and looks to be in good condition, with some improvements needed over time. The more immediate areas that I'd address are updating the windows, and painting the interior. The garage door eventually needs an upgrade since it's manual and looks a bit  worse for wear. The house has been on the market for 136 days, so I may be able to negotiate a lower price going into the down season.

My down payment is 3%, and closing costs will be factored into the mortgage.

The amount for principal, interest, property taxes, insurance, and mortgage insurance would be around $740-$760/month. I estimated gas, electricity, water, sewer, and trash to be $225/month, which could be billed to tenants while I'm house hacking. The cap ex and vacancy rates are 5%, and 6% for repairs, which totals $176.

The realtor informed me that this has been rented by grad students for $1100-$1300/month plus utilities. I know I can have the utilities in the tenants name when I'm done house hacking, so that's less expenses on my end.

I may have no cash flow while house hacking, but it would generate around $230 - $330 a month over the next few years after I leave.

Should I negotiate a little lower than what I'm willing to pay for the deal to work? I'd do so with the expectation that the seller will counter with a price closer to my limit.