Hello BP! I'm looking to do my first deal as a House Hack. I would be using my VA loan benefits with a no money down loan. My question is when you are analyzing a House Hack do you include what your rent equivalent is? I'm currently paying $1200 a month for a 1 bedroom apartment. If I find a duplex and rent the other unit for $1200 would I consider that $2400 for the entire property? If my mortgage was only $1800 and received $1200 from my tenant I would be paying $600 instead of $1200. I know there are other costs to consider but I'm just trying to figure out the basic concept. Any help would be great.
@Scott Todd Start by looking at the rent as if you were renting the entire place, so if a duplex, both sides. Then determine the costs (mortgage, taxes, insurance, etc). Take the total rent-costs and look at that number-it should be positive. Next look at what the difference in rent would be if you lived there-say in one unit of the duplex. how much is that compared to what you currently pay and if it is more, can you cover the additional costs?
House hacking reduces the amount you have to pay. You generally don't count your rent as you're not paying rent. How you would look at it is that your expenses PITI plus utilities are xx amount per month but the tenant(s) are paying x of that amount so you're only paying x. In most cases house hacking won't result in you living for "free" but instead at a subsidized housing amount.
It's a great strategy if you can make it work.
@John Teachout Thank you! That’s what I was thinking. Just wanted to confirm.
@Theresa Harris Thank you! The properties I’m looking at would be a little more each month than what I’m paying now but it’s something I could definitely handle on my own. That way if I have a vacancy for any period of time I’ll still be covered. Obviously the idea is to improve my situation but I don’t want to end up in a far worse position.
@Scott Todd you mentioned a duplex, you could also rent out a room in your half to cut costs. As John said, you want the rent to cover a good amount of the costs, and if you plan on eventually moving out and keeping the place, the rent from both units should cover your expenses.