New Investor - FHA & Cashflow

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New Investor - FHA & Cashflow

Patrice Bocci
NY · Member since 2019 · 26 posts · 7 votes

Hi there! I'm a new investor from NYC looking to invest in New Jersey. My husband and I have started the process of looking at properties and analyzing, making sure the numbers work. Our goal is to house-hack our first property by using an FHA loan, but when we are analyzing a property, we always seem to find ourselves faced with negative cash flow.

I think that's expected when one plans on using an FHA loan, but to make up the difference and get on the path of "living for free", I plan to Airbnb another part of the house like the basement. My husband thinks that we should keep on looking for a deal that will allow us to have a positive cash flow or at least something that will put us in the low negative hundreds.

My question is, does either scenario seem realistic? Also, if anyone is currently investing in New Jersey, what are some areas that you think will cash flow? All thoughts are welcome!

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  • Aaron K.
    Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    6y

    Continuing to look for an FHA that cash flows with you living in one unit seems unrealistic, it just doesn't work that way in every market, or if it does you might be looking at a far less than ideal location. For it to be a good buy it doesn't necessarily have to be completely cah flow positive just less cash flow negative than your next best alternative for housing. I don't know the AirBnb market in your area so I can't speak to that as to whether that is realistic.

    0Reply
  • Patrice Bocci
    OP
    NY · Member since 2019 · 26 posts · 7 votes
    6y

    Hi Aaron, 

    Thanks that's what I kind of figure regarding cash flow. 

    I appreciate your thoughts. 

    0Reply
  • Fasil Khan
    Real Estate Agent · Elmwood Park, NJ · Member since 2015 · 151 posts · 36 votes
    6y

    @Patricia Since fha are low down payments of 3.5% and up they will be very difficult plus you are living in one unit that means you are loosing income from one of the units. Air B & B possible in some NJ areas. Where are you looking in NJ? How much are you putting down for downpayment? 

    0Reply
  • Patrice Bocci
    OP
    NY · Member since 2019 · 26 posts · 7 votes
    6y

    Hi Fasil - We plan to put 3.5-5% down. We've been looking mostly in Newark, because since my husband's job is in Times Square, we are hoping to find a property that allows him to have no more than an hour commute. 

    I figure we will be losing income from one of the units, so I plan to AirBnB our unit occasionally and the basement.

    Btw: its Patrice. Thanks!

    0Reply
  • Nicole Heasley Beitenman
    Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    @Patrice Bocci Are you looking at the numbers as both a pure rental AND a house hack?

    0Reply
  • Patrice Bocci
    OP
    NY · Member since 2019 · 26 posts · 7 votes
    6y

    I'm just looking at it as a house hack. 

    0Reply
  • Scott Anderson
    Rental Property Investor · AZ · Member since 2018 · 212 posts · 183 votes
    6y

    The goal of house hacking is typically low or no mortgage out of pocket. NOT Cashflow. Low down payments aren’t conducive to Cashflow even when not househacking. Be happy if you can live for free. 

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  • James MaraditsPro Member
    Real Estate Broker · Cleveland, OH · Member since 2015 · 239 posts · 224 votes
    6y

    The ideal scenario is to have your housing expense be zero or significantly less than if you were renting in the area AND make sure that if you were to move out of the property in the future that it would then cashflow.  If you can get cashflow while you're there obviously that would be great, but in the New York/Newark market that will probably be hard to pull off so I would consider having the payment offset by the tenants enough to where you're paying no/low monthly a success.

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