Hey Everybody! I'm stuck in a situation and I wanted to get you guys' advice.My girlfriend and  I would love to get started house hacking with a duplex. The issue is that when we run our numbers as if the other unit is vacant and we are responsible for the complete mortgage , we always find ourselves spending nearly as much as we earn when we include expenses that are irrelevant to real estate (car note, phone bill, insurance etc.). I do believe that we can find properties that will cash flow. My only issue is that I wouldn't want to be living paycheck to paycheck while doing something like fixing up a unit or in search of filling a vacancy. What do people typically do in this situation? It's also important for me to note that we have reduced our expenses about as much as they can be reduced. Any advice is greatly appreciated .

@Knoell Palmer factor that into the type of deal your looking for. Also, don't buy until you've figured out how much of a reserve fund you'll need and save.it up in addition to your down payment/closing costs, legal fees etc.

Another thought is don't spend your cash flow. Keep it set aside for a year until you have more than enough reserve.to cover average vacancy rate in your area and any emergencies that may come up.

@Trent Chance Thanks for the advice. After seeing your response, it got me to thinking that the places that we've been looking into may be out of our price range. But then on the other hand, it seems like the places that are within our price range require way more rehab cost than we intend to encounter on our first deal at least.

@Knoell Palmer take.an honest look at your numbers. You may even want to buy an hour or two of time from an accountant who also invests in RE.

One idea may be to rent the other unit per room instead of a single tenant. Not only can this generate a little more cash flow but it also reduces risk that the unit will be completely vacant at any one time.

I will say though, if you know the area and vacancy isn't an issue then just build up a reserve fund considering 3 months vacancy in case of a bad tenant and go for it.

My wife and I are looking at a new construction triplex where two units will cover the mortgage but if we have vacancy we.can afford it plus we'll save up all the money we used to pay per month for our single family home.

@Trent Chance Having a few months of reserves for vacancy does sound like a great idea. Thanks!

Maybe there is a compromise to be made.  For example, find a duplex where one of the units was remodeled (or at least livable) and the other still needs some love.  This way you can immediately rent out done unit while the other is under construction.  The other thing to consider is finding a duplex that doesn't need any work at all.  There is nothing wrong with buying a place that is already nice.  Your time and money can be invested elsewhere and at least you are no longer renting.

Keep in mind house hacking means that someone pays part or all of your bills.  As long as it is equal to what you are paying in rent or less, it is a win as far as I'm concerned.

Originally posted by @Rick Albert :

Maybe there is a compromise to be made.  For example, find a duplex where one of the units was remodeled (or at least livable) and the other still needs some love.  This way you can immediately rent out done unit while the other is under construction.  The other thing to consider is finding a duplex that doesn't need any work at all.  There is nothing wrong with buying a place that is already nice.  Your time and money can be invested elsewhere and at least you are no longer renting.

Keep in mind house hacking means that someone pays part or all of your bills.  As long as it is equal to what you are paying in rent or less, it is a win as far as I'm concerned

Thanks for your input @Rick Albert. We are actually gonna sit down this evening and discuss exactly what it is we are looking for in a property and see how that affects the numbers. Fully renovated properties for the most part seem to be out of our range but finding one that is partially renovated seems like a possibility. 

Good call.  Also keep in mind that for those that are partially renovated means you could allocate that money towards the down payment to make it more affordable on a month-to-month basis.