First Deal Analysis for Duplex in Norwich, CT

[Sean McFadden]

Hey guys, I wanted to run an analysis I ran on a property that was provided to be my by my realtor via MLS. Please note that this is the first analysis that I've run, so I'd like to know if I'm heading in the right direction and if I might be over/underestimating anything.

I am planning on house hacking this property. I will live in the 1BR unit for a year and rent out the 3BR unit upon purchase. I have factored in the rental unit income for my 1BR for purposes of CoC Return.

Pre-Qualified: $180,000 Loan

Property Price: $194,900 (Is it possible to get a loan for this amount when prequalified for less?)

Down Payment: 3.5% ($6,821)

Closing Costs: Estimated 5% ($9,745)

Estimated Loan Amount: $188,079

Loan Interest Rate: 3.25%

Loan Term: 30 Years

Mortgage Payment: $844.56

Other Monthly Expenses: $1,086.44

• Assumes 5% of Income for Repair Costs
• Assumes 2.8% of Income for Vacancy Costs
• Assumes 5% of Income for CapEx expenditures
• $159/mo for Electricity (Should tenants pay?)
• $107/mo for Gas (Natural Gas; Should tenants pay)
• $109/mo for Water/Sewer (Does Landlord usually pay)

Gross Income: $2,150

Monthly Cash Flow: $218/Mo

CoC ROI: 15.86% ROI

I am unsure on how to factor utilities costs into this equation. Above, I am assuming that I am paying those amounts monthly for the 1BR unit, while tenants cover their utilities for the 3BR. I think the estimates above are high for a 1BR but I think I can ask the realtor for average rates. I believe landlords typically cover the cost of water and sewage so I'm not sure if I'm underestimating that figure if that's the case.

All in all, this roughly seems like a solid deal pending there are no glaring issues during a walkthrough. Let me know if I'm totally off base.