buying a house

[cookiedough]

Our 20 year old is in the midst of possibly this week putting an offer down on a house.  He has been renting past 2 years while working part time and going to college rent payments around 450 mth.  He found (well I did online) and talked to private owner selling it small 1100 sq.ft 1870's built home 3 bedroom 1 larger bath newer roof, paint inside/outside, furnace, water heater, appliances included, looks overall in good shape considering the age.  Home was inspected Feb. 2021 and nothing major serious except no grounded outlets in living room and few other rooms and needing minor attic insulation and a few bricks foundation needing caulked/filled in gaps.  Previous water leaks in 2 areas supposedly fixed with flashing on roofs, etc.?  100 amp electrical outlet box and for most part wiring looks o.k. but one area a mess of wires along the wall.  Has potential only 1 car garage but room alongside in back to build a 2 car unattached garage as well like the rest of the houses on the block.  asking price 170K but owner told him he will pay the 4K realtor fee my kid has to pay as well as knocking off 5K so really only 161K to finance for 30 years.
He has saved up some money working part time jobs while going to college past 2 years and already pre-approved at the bank for up to 200K with very limited percentage down pymt and 2.90 percent interest rate for 30 year mortgage. 

The home will never be a 200K home but 161K or so in today's market nothing seriously needed done ASAP (or hopefully) is not bad only will appreciate to say 175-190K tops in years to come. 

guessing mthly pymts 950 mth but he knows a few he will rent it out to with them paying 450 mth so he only has to pay tops say 100-150 mth out of the 950 mth house pymts.   He assures me he knows the 2 people well and will monthly pay no problems.  I wonder though like with housing NOT paying tenants you cannot just kick them out for not paying since he will own the home (well bank owns it) making monthly mortgage pymts?   l think he needs the 2 tenants to sign a contract for 12 months for say 450 mth, anything else needed???????????????????

He currently pays 450 mth for a house rental but he also said he knows people looking for houses to rent in a college town so they might be able to move into his rented house and make the next 7 mths worth of pymts for him.

Amazes me older homes like this sorta fixed up (hopefully) smaller as well going for 160-180K but in today's market where homes under 200K sell within 2 weeks gotta act fast.  He has looked at about 10 houses 150-210K and all but the one at 210K were junk needing much work on to be liveable.  I thought though the taxes paid in 2020 at 2800 was a tad much considering only 1100 sq. ft 1870's home assessed value 125K.  The current owner my kid met today and found he has 2 other showings tomorrow so he has to act ASAP for I know it will sell by this coming weekend if no offer done tomorrow.  We found a nice small 1000 sq ft ranch home made in 1960's as well completeley redone VERY nice inside but had 2 car garage and huge pole barn shed so technically 4 car garage but very small ranch home with LARGE yard take 2 hours push mowing he does not want to do am sure no time for and already had an offer on the asking price of 199K which IMO was too much should've been 185K tops since small ranch home even with 4 car garage and large yard.

[f6john]

My first impression, he would be buying a headache.

[Hook#3287]

Is your son the tenant in a lease on the rented dwelling?

If so, I would try to terminate the lease before moving and would definitely NOT sub-lease it.

He could be responsible for both mortgage and rent, which would not be good.

[MarkT]

My impression, several issues can go bad; likely to be regrets, as well as his very little free time (plus) consumed trying to protect his interests and credit.  Without going into detail.  But then there's "nothing ventured, nothing gained."

[..]

Is your son the tenant in a lease on the rented dwelling?

If so, I would try to terminate the lease before moving and would definitely NOT sub-lease it.

He could be responsible for both mortgage and rent, which would not be good.

+ 100

[cookiedough]

Is your son the tenant in a lease on the rented dwelling?

If so, I would try to terminate the lease before moving and would definitely NOT sub-lease it.

He could be responsible for both mortgage and rent, which would not be good.

Yes, he is a tenant on a rented house having 7 mths left rented June 1 to June 1st.  He is thinking of sub-leasing it since has a few friends willing and wanting to take over his lease on existing older home.  I tried to tell my wife all of this but she will NOT listen to reason and 'what ifs'.  Also something to be said about nothing ventured, nothing gained.   Renting mth to mth to mth forever gains you NOTHING in terms of equity on renting an apt or house.    The value of the house is around 10K more than he might be paying if he puts the offer down this week.  His realtor has to get him final numbers on house payments and my kid has to coordinate with his friends on moving in as well since NO WAY can he afford 1K month house pymt plus 400-450 mth rented house pymt. for very long even with his savings the past 2 years.

[JimC]

asking price 170K but owner told him he will pay the 4K realtor fee my kid has to pay as well as knocking off 5K so really only 161K

Cookie,
The BUYER of a home in Wisconsin does not pay any realtors commission, the seller does. Sounds to me like you have a scammer for a seller.

JIm

[cookiedough]

asking price 170K but owner told him he will pay the 4K realtor fee my kid has to pay as well as knocking off 5K so really only 161K

Cookie,
The BUYER of a home in Wisconsin does not pay any realtors commission, the seller does. Sounds to me like you have a scammer for a seller.

JIm

Yah, sorry I worded that way wrong.  Seller pays realtor commission, my bad.  The seller said to my son he has no problem paying my son's realtor fees being 2.4% of selling price, plus knocking off 5K off asking price as well.   4K to realtor for not doing much so far since we found the home not him.  We are going up today later afternoon to see the house and ask owner some questions on the home he bought in 2019 for his son who moved out of the city area so is currently sitting vacant for several months.  Am sure he is aggressive to sell it before winter and the HEAT bills for it to keep it above 54 degrees daily in northern WI winters, plus shoveling, etc. that has to be done weekly since right across from an elementary school.   

Realtor did send to son last night I read up the home inspection done Feb. 2020, and did have 2 water leaks prior and a few other thing medium (not major) fixes that should be done as well one being grounded outlets in the living room and other areas.   With a home built in 1870's you never know though on what else is hidden since inspection report said potential for asbestos under slate siding.  And there was charred wood section either in attic or basement (not sure) from a previous fire assuming long ago???

Most other homes in that town are OLD built in late 1800's as well and from what my son has seen,  NONE are worth buying except that one out of his price range at 210K being bigger and brick siding and possibly this one as well.

[JimC]

The seller said to my son he has no problem paying my son's realtor fees being 2.4% of selling price

Cookie,
Again, seller is blowing smoke, your son does not pay ANY sales commission, the seller is responsible for all of it. (there is one exception, and that is a buyers agency agreement)
That 2.4% is the amount paid the realtor for listing the house with them, has nothing to do with the buyers.

JIm

[semo97]

To many negatives to me. A 151 year old 1100 sq. ft. for 161k is 146 bucks a sq. ft. You can build a new house for that. The dirt it is on must be high dollar dirt. I do not think it is worth it.

[Hook#3287]

Each state has different laws pertaining to real estate sales and commissions and it's been decades since I was involved in the business.

Having said that, if your son has not signed a contract with the Realtor as a "Buyers Agent", he owes nothing.  At least that's the way it would be in MA.

What your son is trying to do is a for sure juggling act, but as long as he doesn't drop a ball (or his renters drop a ball) he could pull it off.

Also, I would question the actual person that performed the "inspection".

Are Home Inspectors licensed in your state?

A 151 year old house can be better than a 10 year old house in many ways.

Asbestos under slate siding is of little concern until it's disturbed.

[cookiedough]

well kid put an offer calling his realtor at 165K asking price 170K giving the seller until tomorrow to decide.  The owner seems like an upfront honest guy he is a police officer in that town in his 50's and his kid lost his job and moved away soon after he bought the house in early 2021 and then his daughter moved in during the summer until she went off to college in another city as well few months ago.    We drove 3.5 hours up and 3.5 hours back today just got home 10 p.m. - arghhh..  at house 1 hour or so.  Is not a bad small house I do not think but nothing GREAT.    Is a college town and he is 99% sure no problems renting it out anytime for  400 mth to 2 other tenants and most likely able to find someone to take over his current house rental for 400 mth also.  Is close enough to his campus and 400 mth is reasonable considering most 450 on up per month for house or apt. rental. 

Only concern I see is rubber roof on old 1 car garage I measured is 12 wide x 19 deep so he should be able to get his motorcycle in front of his car for the winter and maybe his other motorcycle as well?  gotta have priorities as well right???

He was pretty honest and upfront stating his daughter had a few mice in the house in the spring so he used foam insulation where the garage meets the house pretty sure he thought that is where they were coming in.  I think was an 3x3 opening where back in the olden days used firewood to heat the house storing wood in garage long ago and tossing it into the basement opening which is boarded up now but saw a few gaps so he used expanding foam insulation and no more mice in house after that he said.

ONLY thing he did was fix roof leak with metal flashing OVER the existing 10 year old roof with caulk as well and that did stop the leak he said in the lower bedroom ceiling.  Sorta disappointed in the yard though is not very deep in back like I thought and smaller driveway not wide enough for the 2 cars outside needed not on city streets during winter parking rules unless park side by side 1 car about 3 feet into the grass, but can be done. 

housing prices are thru the roof in WI in most towns way overpriced.  That house in 2016 sold for 70K, then in 2019 sold for 140K and this current owner just bought it in March 2021 for ???  guessing 155K or so not like he is making tons of profit on the sale having put in a new furnace this spring and fixed roof and a few small items.   He told us he just wants to break even not out any money and pretty sure 165K - 4K he has to pay realtor fees on sale so 161K he will be ok with the 165K offer to be done with it.  He said he has 3 other calls just today on the house and showed it to 1 this morning and another tonight at 6 p.m. he said 1 with and 1 without a realtor.    If he goes one without a realtor he will not have to pay realtor fees so he might take that offer if he gets one tonight for at or above 165K kids offer?

If owner wants to hold off to get 167K of his 170K asking price he might as well so told the kid do not be too upset still has until June 1st to keep looking. 

basement is dry not  musty and can tell in past 1-2 years the cement blocks have had 2-3 coats of some type of waterproof white paint on them with decent gray painted flooring as well. 

Is a college town so a ton of renters looking for housing every single year and 400 mth is pretty cheap nowadays in that areas market nothing lower.  Is just close enough to UW campus to be able to walk it but is pushing the length for sure about 45-50 minutes to walk a good 9-10 huge city blocks to campus or 15 minute bicycle ride but not many college students ride bicycles anymore.

[cookiedough]

like someone said per sq. footage,  you can still build a new house for that price of 165K but what about the land?  city lot prices are 30-50K for a dinky 70x100 foot piece of dirt in most WI towns now.

back in 1993. we built our small ranch home in dinky town for 80K about same 1100sq ft. ranch home nothing fancy but the 100x110 foot city lot was ONLY 5K.  Now, the darn same or smaller lots are 25-30K for this dinky town which is insane high.  Same size lot in Madison WI runs 50-70K some 30 miles north of me. 

I told my kid he better make sure he can afford it if his 2 tenants do not pay since we are not helping him out with mortgage pymts.  now that he is back in college full time and only working very part time hours now vs. during summer he had a good paying job at 18 per hour plus tips.  He is confident his friends will pay rent no problems.  I trust the one but the other one is a female and my kid says she is very trustworthy as well since she is paying now 450 mth for a dinky 7x9 foot bedroom no AC and the smaller bedroom in that house is 8x10 with central air vs. upstairs bedrooms ok size 10x12 range.

[Savago]

Damn... 180K to 200K for a home? That must be pretty sweet.
 

You simply can't find anything decent in the SF Bay Area for less than 800-900K. The median home price in Contra Costa county is at 779K... and going up.

Just insane.
 

[Rams]

My first impression, he would be buying a headache.

I agree with John.   Ya better plan on spending a  lot of time, effort and money helping him out Dad.

guessing mthly pymts 950 mth but he knows a few he will rent it out to with them paying 450 mth so he only has to pay tops say 100-150 mth out of the 950 mth house pymts.   He assures me he knows the 2 people well and will monthly pay no problems.  I wonder though like with housing NOT paying tenants you cannot just kick them out for not paying since he will own the home (well bank owns it) making monthly mortgage pymts?   l think he needs the 2 tenants to sign a contract for 12 months for say 450 mth, anything else needed???????????????????

This is also a big concern.   My daughter tried this approach with "friends" she thought would pull their share of the load while living in her home.   Guess what, three of those "friends" let her down and are no longer "friends".   Thankfully, my daughter could pull this load by herself although she strained her finances doing it.   This is not a good idea.   Once a renter gets in, if they don't want to leave, eviction can be very difficult and can be a very tense situation.

Rams

[Jersey mike]

Just a couple things to think on.


Before going further on the purchase, go to the township and checking for all permits issued over the years.  Never rely on just a paid for home inspection unless you hired them, even then nothing is certain.

The biggest issue with old farmhouses is the plumbing and electrical.

For comparison, my house (1,000sqft, 1 and 1/2 baths central A/C gas heat and basement) built circa 1964 was equipped with a 70amp main breaker. About half the house is on 1 circuit, including the kitchen, bathrooms, garage, living room and 2 bedrooms. All circuits were 15 amp. This became an issue as we grew as a family, the main circuit would trip occasionally but became a pain.

I eventually upgraded to a 200 amp service and after an inspection of the wiring, upgraded to 20 amp breakers and added additional service to bathrooms, kitchen and basement all on their own circuit.

So, even though the man has been living in the home, is it ready for the electrical use it may now get with 3 people living there all on different schedules and lifestyle…gaming, tv, computer, microwave and so on.

Is the garage on its own circuit? Will he or they be using power tools and such?

Does the house have central A/c or is the house cooled with window units? 3 bedrooms and a living room running window units on how many circuits? I’d take a closer look at the wiring and all the outlets in the house, especially since you saw evidence of a previous fire.

Plumbing…hoping everything is copper with lead free solder. Might want a water test and find out where septic system access is and the location of the septic system if it’s not obvious or you have city water and sewer.

The lathe and plaster walls can be difficult to deal with if and when the time comes as well as access between the studding.


Correction……our house is 1,400sqft.

[Psychotic Bovine]

Damn... 180K to 200K for a home? That must be pretty sweet.
 

You simply can't find anything decent in the SF Bay Area for less than 800-900K. The median home price in Contra Costa county is at 779K... and going up.

Just insane.
 

I paid $48k 25 years ago.  It's worth about $90k now.  Very few of the houses in my addition go for over $110k.  Average home price here is $145k.  $500-$700k will get you a large house on 10 acres in this area.  Oh, I pay $600 a year property tax.  Not bragging, just comparing to what things cost in "flyover" states.  Also, our house is paid off.  Greatest thing that could happen to my wife and I.

[Savago]

I paid $48k 25 years ago.  It's worth about $90k now.  Very few of the houses in my addition go for over $110k.  Average home price here is $145k.  $500-$700k will get you a large house on 10 acres in this area.  Oh, I pay $600 a year property tax.  Not bragging, just comparing to what things cost in "flyover" states.  Also, our house is paid off.  Greatest thing that could happen to my wife and I.

Is good to have more data points to better appreciate other States.

A paid off mortgage is something tough to get done, consider yourself truly blessed my friend.
 

[Rams]

Damn... 180K to 200K for a home? That must be pretty sweet.
 

You simply can't find anything decent in the SF Bay Area for less than 800-900K. The median home price in Contra Costa county is at 779K... and going up.

Just insane.
 

As the realtors say, Location, Location, Location.

I've had six different opportunities to move to the west coast in my life, turned them all down.   Salary sounded great but when I asked about housing and acreage, it became a no go.   I once had a gent that offered me a job tell me that folks that want to live on the west coast have a to make a few sacrifices to live there.   He told me the property I would want (similar to what I had in KY) would run in the 5 to 6 million dollar range.    We didn't talk much after that.   

Rams

[f6john]

Evidently not as bad as the UK. I read where Adele bought a place in California and stated that she could never afford a similar property in the UK. I seem to remember that at one time she was renting an English castle so her new digs must be nice!

[Psychotic Bovine]

I paid $48k 25 years ago.  It's worth about $90k now.  Very few of the houses in my addition go for over $110k.  Average home price here is $145k.  $500-$700k will get you a large house on 10 acres in this area.  Oh, I pay $600 a year property tax.  Not bragging, just comparing to what things cost in "flyover" states.  Also, our house is paid off.  Greatest thing that could happen to my wife and I.

Is good to have more data points to better appreciate other States.

A paid off mortgage is something tough to get done, consider yourself truly blessed my friend.
 

Yeah, for sure.  Indiana doesn't have a huge amount of curvy roads, and the southern part is the only truly beautiful area, but our land is cheap. 

[cookiedough]

100 amp service newer electrical box and saw separate breakers for kitchen/dining room/etc.   Plumbing seems o.k. but one never knows is cast iron pipes going in basement to the road and know my parents home had cast iron rot while I lived there and that house was built in 1950's vs. 1870's.    My brother's older home also had tree root issues going into underground pipes having to hire roto-rotor to clean  out piping. 

Well,  it is done kid got the house but still think he overpaid but as said, location, location, location.  He now has to work with his realtor and financing to start making his first payment come Jan. 1st 2022.  Not a huge fan of his realtor will not go into fine detail, but IMO he not very good doing his job. 

House would not be for me, but is liveable especially for college kids renting it out while he lives there as well.  I found in same town a smaller 970 sq ft upkept home with 4 car garage huge yard no close by neighbors and 10x12 new storage shed for 199K still way too much but was in better shape with more storage/garage space which right now my kid does not really need age 20.  We shall see how his friends pay monthly bills but he has lived with one now 5 months no issues know him he seems responsible and nice and the other female he knows will be moving in he says and sounds like she is very responsible paying 450 now for a dinky 7x10 bedroom NO central air, etc. 

Kid thinks he will make money on the whole thing long term just worry about the 'what if's' and there can be many over the course of just a few years even.

[cookiedough]

the old big house he rents out now is a HUGE house has 6 tenants in there now,  4 guys main level where he is at and 2 females living upstairs above them.  You cannot tell me there is no money to be made having 6 tenants pay 400 mth plus all utilities, etc. being 2400 mth.  That is as much as I make in a month working. 

I tried last night in his house lifting the tiny 14x14 inch attic access square in 2 spots upstairs and man oh man how do you get  up in that attic have to be 110lbs. to fit thru that opening to add more insulation up there if need be and only like 3-4 feet tall up there is all.   Owners in the late 1800's must have been very tiny.  NOt sure even a roll of thinner insulation can be stuffed up in that hole and maybe use my long extension golf ball retriever with head peaking thru opening to move insulation around?  (used to get golf balls out of the water or in my case at my home kids throwing frisbies, etc. onto my roof getting them down)

I saw old white big porcelain electrical round things (insulators?)  attached to the attic roof up there,  so that must be WAY old electrical from way back before my time, not sure?  NO wires running from them though am sure modernized since then 1870's.....

[Jersey mike]

Ah, the pride of homeownership. I wish him all the best.

What’s done is done and I hope he has a bunch of great years there.

[cookiedough]

thanks all for the comments and advice, etc. 

What I do know is if any house up there is worth buying,  you have to jump on it ASAP for every single home within weeks someone puts an offer on it and most all are getting full asking price or very close to it.  His realtor was suppose to offer 165K of the asking 170K but sounds like after his realtor talked to owner that the owner has had several past few days seeing the house and a few potential offers, but since my kid was like 2nd to see the house past 1 week for sale the owner was nice enough to go back to realtor and ask my kid if 170K o.k. so he gets the house.  I was pretty sure even 5K off the owner would go with someone else if he knew he could get full 170K asking price, especially since the owner had to pay kid's realtor a few grand fees.  I think in this instance my kid could have saved 3-4K if he had NO realtor since as said,  the seller had to pay his realtor the realtor's 2.4% fees for doing not much at all.

[cookiedough]

wow, closing costs and fees at lending institutions surely has gone up and up and up since I last done it in 1993.  They are surely making HUGE profits on home sales judging by the loan disclosures I read up on kid's house tonight closing day is Dec. 1st just one day AFTER his 21st birthday.  I guess is his B-day present to himself, a homeowner?  

I do not get why so many fees never heard of half of them now?  to make more money is all IMO.  

was funny though bank made a typo said my kid makes 22000 per month.  Gee, you think he could afford a much bigger, newer, nicer home making that amount?    Am guessing should be 22000 per year working part time in college.

the lending institution he is going thru still has to approve the loan looking over home to make sure the 170K price paid is worth that much in value...  should not be an issue but never know?  I still cannot wrap my head around how house sold in 2016 some 5 years ago for ONLY 70K now 170K?   Yah, tons of updates new furnace, water heater, roof, windows, bathroom, kitchen area but even all of those newer items do not make the house go up 100K in 5 years more like 30 to 40K tops.  They are dozens of older homes like his in worse shape though in that town still asking 150-175K as well with contigent offers on them so somehow they sell ASAP all of them.

also found out that more than likely he will not only need homeowners insurance but an endorsement on it called landlord insurance since is renting out 2 tenants as well as living there which might cost 100-200 more per year, will see?  

If was me,  I would have stuck to my guns at 165K offer vs. 170K full asking price, but know 99% if he did take off 5K the owner would have held out for that near 170K asking price and got it.  The extra 5K though over 30 years is only 19 more per month in pymts. in that 1K per month range.

gosh, I sure hope this is his LAST MOVE for more than just 1-2 years, since both kids in college past 4 years or so have moved both of them like 5x's already and 3.5 hours north is NO fun driving home being that tired done all in 1-2 long days.  

[JimC]

was funny though bank made a typo said my kid makes 22000 per month.

Cookie,
I am willing to bet that the bank will catch that mistake, they are very good at background checks.

Jim

[cookiedough]

was funny though bank made a typo said my kid makes 22000 per month.

Cookie,
I am willing to bet that the bank will catch that mistake, they are very good at background checks.

Jim

Am sure will not be an issue.  Biggest 'what ifs' I see are keeping 2 tenants for year after year after year.  His friends now in college can easily MOVE AWAY in another 2 years or so to another city and getting in new tenants while living there for say 5-10 years longevity that are good tenants can be issues for sure.  Also,  'what ifs' about the house seems fine now but was built in 1870's so who really knows what will happen to roof and foundation, etc. in 5-15 years?

[Jersey mike]

was funny though bank made a typo said my kid makes 22000 per month.

Cookie,
I am willing to bet that the bank will catch that mistake, they are very good at background checks.

Jim

Am sure will not be an issue.  Biggest 'what ifs' I see are keeping 2 tenants for year after year after year.  His friends now in college can easily MOVE AWAY in another 2 years or so to another city and getting in new tenants while living there for say 5-10 years longevity that are good tenants can be issues for sure.  Also,  'what ifs' about the house seems fine now but was built in 1870's so who really knows what will happen to roof and foundation, etc. in 5-15 years?

Worry about the years ahead later. Right now it beats paying rent, now he’s a homeowner.

Remember nickels and dimes add up to $$$ and extra payments on the principal are ok.

An extra $100 every couple months do help. For years we applied our state and federal tax return directly to the principal. Every little bit helps.

[Jess from VA]

Speaking of necessary tenants (to make this purchase work for him).... I hope he knows to watch out for guys (or gals) who would plan to move in and then just stop paying rent because of eviction moratoriums (and holdover forever).  He better get a good handle on state and local law and procedure on non paying tenants, what the courts are doing (and not doing), and what would happen to him if he just took a non paying tenant's property and put it on the street and changed the locks.

He better make it his mission to become an expert on local landlord-tenant law and procedure, draw up the best landlord protecting leases he can find to protect himself, and also better be good at vetting potential tenants to pick ones who do intend to pay on time, and take care of his property, and help with normal housecleaning.  And not to not throw giant house parties like the ones in the movie Animal House.

No parties, no kids, no animals, no live in girl friends, no drum sets, no loud noise or stereo, no noise at all after 10PM...... (add as necessary)

I would think a good indicator for student tenants would be good to excellent grades.... indicating an intention to do well in and stick with school.  

Standard form leases are all over the internet, but it may be that leases drafted with your state and local laws and regs used to best landlord advantages have been created.... if so, that's the lease he wants to find and use.  Most college campuses have private student ghettos surrounding them with homes turned into (multiple) rental units.  Find what leases those property owners are using.

If good tenants are a necessary part of this home purchase plan, he needs to find good tenants (and weed out bad ones). 

[scooperhsd]

Jess didn't say it , so I will - writing up said lease for the tenants might be worth paying a good real estate attorney for, one who is up with what's happening in your son's area.

[cookiedough]

all good advice will relay the messages to kid.  The kids he hangs around with are non partiers right now and decent that I have seen anyways.  As far as picking up after themselves though not so sure?  Will be a learning experience for sure and really think he will learn a lot of what to do and not to do in first 6 months there being a newbie on all of this.  I do know he has to get a signed agreement on sharing equally the cost of heat/electricity/internet, etc.  along with a TON of other stuff he needs done in only 1.5 months from now.  Sorta bad time timing with winter approaching in upper WI about the same time he moves in Dec. 1st.  Our luck 2 feet of snow up there by then would not doubt it.  The homeowners insurance, etc. is built into that 950 to 1K monthly house payment so as long as his 2 tenants split utilities 3 ways and pay each 400 mth he should be fine.   He better take my advice and shop around a lot ASAP for house insurance for I have a TON and can tell you the pricing varies by 100's of dollars per year on various insurance companies.  Cheapest being 400 year highest being 900 year for my house.    It will be interesting to see if his 1870's built house is a ton more or less in cost as my similar sized house built in 1993?