What to do with positive cash flow in House Hacking buy & hold

[Michael Brown]

I'm 32 years old, single, and no kids. So I have the freedom and ability to take risks right now.  I've been "lurking" on this website for over a year.  (Lurking meaning reading reading reading but not posting or contributing)  I've rented all my life and never owned.  My lease is up soon, I have a real estate agent and am pre approved. 

I'm interested in condos for a couple of reasons.  I've never owned so I don't have all the normal house-keeping tools and will already be making a lot of first time purchases so am not interested in adding a lawn mower and similar things to the list.  I also like the idea of someone else taking care of the yards, pools, etc

I have my eye on a couple of really nice 3bd/2ba condos.  I've got several good friends to choose from who are interested in renting the other two bedrooms.  Mortgage including insurance, taxes, and condo association fees will be right around $800.  A fair rate in my city to rent out a room is $600.  So I'd get $1200 from renters plus I'd put $400/month of my own money toward the rental pool = $1800/month which is roughly $800 positive cashflow. 

My intention is thinking long term.  So I can put the majority of that $800/month plus other savings toward the down payment for another investment/rental condo.  Or I can put an additional $250 toward principal and have it paid off in 15yrs... A lot can change between now and then obviously but I'd envision myself having moved on, living somewhere else have having that as just a side rental and retirement cashflow.

Think I'm on the right track here?

[Jason McKinley]

Hi Michael,

Glad you have decided to stop lurking and start participating! In regards to your question of being on the right track it all depends on your market and comfort level. I personally am comfortable with buying SFR and small duplexes and so based on my market would not entertain a condo. I would suggest that if you are going to house hack, why not do it with a single family detached? If you are going to have cash based on renting the extra rooms out then you could use that money to pay for maintenance/lawn tools or even pay someone else to take care of it.

Go in with a solid the exit strategy(ies). What gives you the most options? If in your market condos have a stronger market than houses go with the condo, but if the SFR has a stronger market and more exit options then go with the SFR. Either way you have to know the market and be comfortable taking the risk that is involved. Do what makes sense to you.

Best of luck to you!