Beginner Investor Looking for Advice

[Jassiem Robinson]

Hi All! I'm a brand new real estate investor close to locking in my first property. However, I am trying to follow the BRRR strategy but also trying to house hack at the same time, so I'm not sure what this strategy would be called. Anyways, I have a property that I want to put an offer on but am anxious about the numbers due to my inexperience and was hoping the community could give me some advice!

Here's the breakdown:

- I'm looking at an on-market Duplex(2 bed/1 bath each unit) in an up-and-coming neighborhood in Atlanta. My gf and I plan on house-hacking initially and then renting out both units and refinancing it once we are able to get another property and move out.

- It's selling for 250k and the ARV is $353,276.

- I'm estimating 50k in repairs. With this 50k number, to get a 70% discount, my MAO is $197,293, which probably won't get accepted. However, the duplex has been on the market for 30 days.

- I will be utilizing the 203k FHA loan to get this property and rehab.

- I created a Cash-on-Cash return calculator and listed all of my expenses (I'm still trying to dial in more accurate numbers on some of the expenses but have general numbers right now based on some research).

- I have my rent for each unit at $1700/month

- My estimated downpayment and closing costs are $24k

- Based on what I have, my calculations are giving me a cash-on-cash return of 18%.

So my questions:

- Do you all think I should stick with 70% discount and pass on the property or low ball them? Or should I take an 85% discount to lock it in? There aren't many duplexes on the market and even fewer that fit my criteria and are accepting FHA loans.

- Am I missing anything in terms of calculations or considerations?

- Do you all think my overall strategy is a good idea?

[Ryan Legat]

I'm looking over your Evaluation sheet and some information seems to be missing and/or misplaced. 

You want to first figure out the PMI (Principal, Mortgage, Insurance) payments each month. I don't see it clearly listed in one spot on your sheet. I see taxes in one spot and I see a Mortgage cell with 11% (is that the interest rate?) There are mortgage calculators online but based upon your down payment of 11k, purchase price of 250k, 7 percent interest rate and insurance of 55 a month I came up with around 1300.00 a month PMI payment.

You also want to figure out all the utilities that the tenant won't be responsible for. Water, Gas, electricity, etc. Are the meters for these separate? If not  you will want to account for that in your expenses. If any are separately metered than you will have to only pay that expense while you are living there. It will help if you run 2 sets of numbers, one while you are an occupant, and one when you move out. 

I ran some quick numbers myself and if you do get the property between 250k - 300k and charge 1700 for rent most of your PMI, maintenance, and utilities will be paid for by the tenant. Of course when you move out the next tenant will pay 1700 a month which will be all profit. It varies by location but where I live that would be great cash flow and an ideal situation for a house hack. The deal looks even better when you consider the money you will be saving by not paying rent out of pocket each month.