House Hack, Duplex Analysis for me and business partner!

[LaMont Washington]

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*This link comes directly from our calculators, based on information input by the member who posted.

INTRO

Ok, so here's the deal. This is a duplex, student housing property with it's own management company on-site which I think is great, takes the load off me. It's only a few minutes away from a very popular college, movie theaters and malls. It has 8 rooms total. Each unit has 4 rooms, 1 downstairs and 3 upstairs, each room with their own bathroom. The rent is $550 per room with a 12 month lease, and $650 per room with a 6 or 10 month lease. So for this calculation I did a $600 per room just to find a middle ground or average. If you guys think that's not a good idea, would love some feedback. So, me and my business partner are trying to house hack this together.

FINANCING

My idea is to use an FHA loan for the financing, since it's multi-family and we will be living in it, which will qualify us for 3.5% down. Along with that, I would use a down payment assistance program (hopefully we could qualify for that) and they would cover the down payment, up to 4-5%. So, no money out of our pockets for the down payment, but the closing costs for this $240,000 property will have to be around $12,000. Unless I'm horrible at calculating closing costs. And that is what we would cover putting our money together.

We would only be getting profit from 6 rooms. That income would be $3600. Now, on the management site, it had their utilities laid out, electricity capped at $120 per unit making it a total of $240. And water capped at $60 per unit so $120 in total. Tenants will be charged the pro-rate of their share in excess of these prices. I used Redfin.com to find the Hoa fees. If any it said there were "other fees" of $100. So I added that in there. Then I tried to find an accurate number for insurance. Came out to $75 per unit, I think. So, just incase I did $150. Other than that.. did my variable expenses and voila, the numbers came out looking pretty good with a 23.8% ROI. Now, I know, going back to the part about whether $600 per room would be a good or bad entry for the report. In a "worst case" scenario where each room is on a 12 month lease paying $550 per room, we would only be making a cashflow of $104.58. Don't know the ROI I'm sure it's low. BUT... buuut, after a year, if we can manage to not pay any rent and only make $52 each in profit (oh the horror! lol) me and my business partner could just move out and our profit would be $1204.58 if we rented out our two rooms for the least amount of $550 each.

IN CONCLUSION 

I think it's a good deal, but this is like my fourth property analysis. I feel a little insecure and want to make sure I'm not missing anything. Let me know what you guys think. Thanks!