Deal Analysis: Northern NJ Multi

[Alex Brown]

Hi everyone! First time investor here. Looking for some advice in regards to deal analysis on a house hack.

A + neighborhood. 

Purchase Price: $885,000 Taxes: $23,000 per year (yeah I know, welcome to NJ)

Rents: $2,925 (3 Bed 1 Bath) , $2,925 (3 Bed 1 Bath) and $1,450 (1 Bed 1 Bath)

Legal two family with third floor "border" apartment. There are comps listed on MLS for third floor at $1,500 across the street and comp for 3 beds at $3,200 next door. No issues renting out units in past. Very competitive market. Units are slightly under market value as indicated.

This would be a house hack. Live in one of the three bedroom units and rent out other two. Wouldn't be using a property management company as I am living in unit. I am currently renting very close by in a two bedroom 1 bath for $2,600. Property looking to purchase is in much better shape.

FHA Loan with 3.5% or 5% Down. Leaning towards 3.5% just to have safety buffer. Planning on paying down more than monthly payment as time goes along and then re-financing in a couple of years. Pre-approved for all FHA options. Would re-invest profits from property into mortgage. If something comes up that needs repairs then would lessen the re-investments accordingly.

Issue I am running into is that there will be $700 a month in PMI based on low amount down and large loan. Even with the high PMI and high taxes, the property is still flowing based on my estimates. Conventional would not work based on PMI not being offered and needing 15% down.

Thoughts?