First House Hack – Deal Advice!

[Tony Pragosa]

Hello BiggerPockets community!

I just recently joined, and am new to the real estate investing field. I'm a first time home buyer, and looking to purchase my first multi family unit building. I do have a few questions, and would love any and all advice/critique of the below deal. I'll try to make this post as concise as possible, but please let me know if you need any additional information. Thank you all in advance!

My Situation:

Looking to purchase a duplex in Philadelphia, PA.

I plan on occupying 1 of the units.

Due to my job, I work and live overseas for approximately 6 months per year. My annual expenses are low, and my income is fairly high.

I plan on going the conventional loan route. I also expect to fully pay off the mortgage in 10 years or less.

The Building:

Current purchase price is $365k.

2 beds in each unit.

Both units are fairly updated, so repairs/value add would be minimal.

Projected rents in that area of similar units ~$1500/month.

I will be having property management take care of the rented unit.

What do you all think of the below metrics? Am I missing anything? Are my percentages too low?

Should I opt for an FHA loan instead of a conventional loan?

Am I over-analyzing?

Home Price	$365,000
Down Payment %	5%
Down Payment	$18,250
Closing Costs	$14,600
Down Payment Total	$32,850
Mortgage Term (In Years)	30
Loan Amount	$346,750
Interest Rate	7.000%
Rent	$1,500
Mortgage Payment	$2,307
Property Taxes	$300
Insurance	$100
Property Management (12%/Month)	$180
Vacancy (5%/Month)	$75
Repairs (5%/Month)	$75
Total Monthly Payment	$3,037
Total Annual Payment	$36,443
Monthly Cash Flow	-$1,537
Annual Cash Flow	-$18,443
Monthly Cash Flow w/out Mortgage	$3,077
Annual Cash Flow w/out Mortgage	$36,923

[Tim Herman]

@Tony Pragosa I'm not a fan of percentages. You need to run budgets to get a better idea. Like @Eric Greenberg said age of the improvements makes a difference in your capex. An example. You determine a new roof will cost you $7500. Life span is 25 years. $7500/25 year life span/12 months in a year=$25 per month. Same roof but now it is 15 years old. Your effective lifespan is now 10 years. $7500/10 years/12 months in a year=$62.50 per month. You have to do the same with all the major components.

You also need to run a repair budget. You have to make some decisions. How often are you going to repaint between tenants. A 5% vacancy is the equivalent of your tenant staying 20 months. An example. Cost to repaint the unit $1500. Deep clean $300. Number of service calls 1.5@$150=$225. $1500+$300+$225=$2025/20 months=$101.25 per month per unit.  Now what if you touch up between units and paint every 5 years. Cost of touchup $300. So you will have 2 touchups and one major plus 3 cleanings and 5 service calls. $1500+$600 touchup+$900 cleanings+$750 service calls=$3750/60 months=$62.50 per month per unit. Better numbers make better decisions.