Hello,
It's been ~3 months since I read BiggerPockets' The Book on Rental Property Investing and, with interest rates being so low, I'm trying to enter a decent house-hacking deal as I move away from NYC. I'd want to live in a 1br/1ba unit and rent/airbnb the other units. The intention would be to hold onto the property long term (30-40+ years). Here's the deal I'm considering now:
Property details:
-$650k asking price
-Triplex
Unit 1: Studio (currently renting at $1,350)
Unit 2: 1br/1ba (vacant right now)
Unit 3: 5br/2.5ba house (2834 sq ft, detached from units 1 & 2, w/ family room, sitting room, living room, den/office, finished basement, owner-occupied right now)
Total sq ft of all units: 4558
-Lot size 0.76 acres (includes the 0.24 acre attached lot)
-Year built 1963
Pros:
-12 min walk from town's artsy/small-town-feel Main st.
-Borders a country club ($2,590/yr for individual golf membership, $5,178/yr for a family)
-Good school district with elementary/middle/high schools
-Low crime
-Homes in Beacon are appreciating well (~8% a year, not to say that this will necessarily continue)
-Tons of parks, outdoor activities (basketball, baseball, tennis, running tracks, etc), art galleries nearby
-Metro north 20 minute walk away
-International airport 20 minute drive away
-0.24 acre lot which could be sold/built on (not sure what can be built -- still need to check with the city, though I would try to sell the lot)
-Obvious the owners took good care of the property
Cons:
-Driveway is off the town's busiest 3-lane street and is a one minute drive from I-84 (during rush hours the lanes get packed)
-Back yard has a flat area, but towards the back it is a steep climb up to an elevated area. This elevated area looked like it had rock formations just barely exposed at the level of the grass, so it likely has large rock formations which wouldn't be easily removed. It makes the back yard feel smaller and I'm concerned about someone getting hurt on the property.
Airdna estimates the home could Airbnb for $467/day at a 53% occupancy rate, which amounts to $90,706 annual revenue. Realtors and landlords in the area have told me the home would rent for ~$3,200 otherwise.
Here's an excel workbook of the three situations I've estimated:
1. FHA loan + Renting all units
Avg monthly revenue year 1: -$1,964.25
Total down payment, moving, closing costs: $124,252.38
2. FHA loan + Renting studio & Airbnb home
Avg monthly revenue year 1: $488.83
Total down payment, moving, closing costs: $124,252.38
Total cost to furnish home: $85,000
Total one-time costs: $209,252.38
3. Conventional + Renting studio & Airbnb home
Avg monthly revenue year 1: -$99.17
Total down payment, moving, closing costs: $49,407.00
Total cost to furnish home: $85,000
Total one-time costs: $134,407.00
By the time we would be able to close on the home, I'd just barely be able to afford the one-time costs of option #1 and #3; however, it would drain ~all the money from my bank accounts. Option #2 is completely out of reach at closing-time due to the cash I have on hand; however, I could go with option #1 and later turn the home into airbnb after my first tenants in the home move out. Renovating the kitchen and bathrooms of the home would help the property rent/airbnb, but I wouldn't have the cash on hand to do that until ~mid-late next year.
I'd like to go with option #3 but I'm struggling to find conventional lenders in the area that can do 5% down.
Note: none of the deals listed account for any tax-savings.
At the moment I'm paying $1,550/mo to rent a ~300 sq ft apartment in Brooklyn, NYC, so even if I go with option #1 I'd be paying $400 more/mo than I am now to build equity instead of throwing my money away.
What are your thoughts?
