Cash flow by house hacking on an FHA loan

[Amiel Bituin]

Hi BiggerPockets community! I am starting to look for my first investment property and have done two deals analysis on multi-family properties in the area that I'm looking for. My problem is that when looking at the two deals, the cash on cash returns look to be negative (using the BiggerPockets Rental Property Calculator). I was wondering if I can get some advice on how I can net my cash flow to just be zero or even to be positive. In the analysis that I have done I factored in 5% expenses for maintenance and repairs, CapEx, and vacancy rate. I am also planning to use a property manager. The properties that I have looked at in the Philadelphia area (B and C Class) also seem to have multi-family properties from top-to-bottom and utilities are separate besides for water. My overall question is advise for how you can cash-flow a multifamily property by house hacking and getting a loan as an FHA (If it is possible on my first year).

A little background on myself is that I am currently traveling for work an entire year and I will be heavily looking for the property before or by the time I get back. I have been reading some books specific to real-estate, including the book on Rental Property Investing , and (currently reading) the Multifamily Millionaire Volume 1 by Brandon Turner, as well as tuning in to the podcasts. Wanted to reach out to the community to start looking for direction.

Thank you and appreciate your time and help!

[Marcus Auerbach]

First thing is thing is that you have to pay rent too - otherwise you account for a permanent vacant unit and on a duplex that would be 50%. Second, with FHA you have only 3.5% down and on top of that you have PMI, so you have a large loan and your payments are big. I would be shocked if you could find a property that could cash flow under these circumstances.

It's still worth it. See if you can get a conventional loan with 5% down.