Time Sensitive - Deal Analysis

[David Romero]

Hello, I'm looking into closing on a fourplex (8bd 4 bath) down in the Mid-south region . I am using an FHA loan and bringing about 6500 (+ 2900 that is in escrow) to closing, I've got about 20k in Seller Concessions, that includes 3 points being bought down.

My monthly payment will be around 2400. There is already two tenants that live in the bottom two units, both pay 675. Top two units will need fixing, estimating repair costs about 15k, that is including flooring, appliances, doors, getting the electrical up to code. Total fourplex upgrade cost would be around 35k on high end, this includes new flooring, gutters, electrical, cabinets etc. I only plan on fixing up the two units for now as I do not want to inconvenience the bottom tenants. I plan on raising their rent by 100 each if I close.

I'll be buying this property for about 299,000 however I plan on renegotiating and dropping it to 285,000 with the max being 290,000. My favorite part of this property is its potential to cashflow, Section 8 rent is around 1200 for a 2 bedroom, 1 bath. I plan on living in one unit and renting out the other 3, one of those units being a Section 8 tenant. Ideally after a year I want to move out and repair the bottom two units so I can 4 Section 8 tenants paying me around 1200 a unit.

My hesitation is how much money I would have to put in just to rent out one unit to Section 8, I have to fix the flooring, doors, window and some appliances and the electrical in order to qualify. I think it would be a great play especially in the long run however I'm just hesitant and worried about funds being tight. I have about 6 months worth of reserves but would have to take a loan out for the repairs.

About me: I have good credit, have about 15k worth of debt including student loans, and live with my parents. My field offers remote work however I'm currently an intern, I'm looking for full-time position which should raise my income to at least around 65k. My income is around 45k which fuels my hesitation as my pockets are going to be tight. Any input is appreciated, thank you.