What would you do if there were no cash flowing house hacks?

Starting Out
5yFollow

What would you do if there were no cash flowing house hacks?

Daniel Fitzroy
Member since 2019 · 110 posts · 80 votes

Hi Bigger pockets! I’ve recently began practice analyzing potential house hacks for my girlfriend and I to purchase with a year. We are almost ready as my truck is almost pd off and my credit card with a 2k balance is the only other debt I have. My gf is saving up for a down payment and I will be hustling to make all this happen.

My concern is this.....what happens when we look on Zillow/realtor and can’t find any cash flowing duplex’s in our area for a first time house hack? I understand we aren’t going to need a home run deal but just a decent deal to get us started in real estate. What would you guys do? My girlfriend is considering we should just settle for a single family house and do a live in flip. I think it’s still possible to find a better deal perhaps I should look off market for a duplex or send out mailers and learn to market? Idk just looking for opinions thanks!

We are located in Dutchess county NY about two hours outside of New York City has anyone else house hacked around here? I know someone who owns a trailer home and only pays like 600 a month for a lot fee and pd cash for the trailer itself. I guess that’s an option too but ide like to try for a duplex/triplex

0Reply
88 views

Most Popular Reply

Dan WeberBusiness Member
Realtor · Portland, ME · Member since 2015 · 656 posts · 552 votes
5y

@Daniel Fitzroy how are you analyzing your house hack? You said you're looking for a cash flowing house hack. So, are you looking for it to cash flow while you live there? That's unlikely to happen with a duplex. Generally, if I'm house hacking, I would ideally like the other unit(s) to cover my PITI and then cash flow nicely when I move out. If you house hack a 4 unit building, then you may get some extra cash every month while you live there after you pay the bills. When analyzing, I'd run your numbers like you are not living there as you likely won't be living there for 95% of the years that you own the property. Also, this gives you more of an apples to apples comparison when looking at investments.

3Reply
See this reply in the discussion

20 Replies

Jump to latestLatest
  • Joshua Nowell
    Rental Property Investor · New York, NY · Member since 2020 · 24 posts · 15 votes
    5y

    Have you thought of renting by room to improve income?

    2Reply
  • Jerome JacksonPro Member
    Investor · Hudson Valley, NY · Member since 2018 · 26 posts · 11 votes
    5y

    Hey @Daniel Fitzroy, quick word of advise I have is that at the moment there is not a lot of inventory on the market right now. After a quick glance there are currently only 35 multi family listings in Dutchess County whereas double that number sold pre pandemic in the year 2019.

    I would suggest trying other ways to look for deal (i.e off market marketing), or wait it out and keep saving until more inventory hits the market.

    Or you can follow @Joshua Nowell suggestion and look into purchasing a large single family house and rent by the room. You just have to think through how comfortable you are with doing so.

    2Reply
  • Dan WeberBusiness Member
    Realtor · Portland, ME · Member since 2015 · 656 posts · 552 votes
    5y

    @Daniel Fitzroy how are you analyzing your house hack? You said you're looking for a cash flowing house hack. So, are you looking for it to cash flow while you live there? That's unlikely to happen with a duplex. Generally, if I'm house hacking, I would ideally like the other unit(s) to cover my PITI and then cash flow nicely when I move out. If you house hack a 4 unit building, then you may get some extra cash every month while you live there after you pay the bills. When analyzing, I'd run your numbers like you are not living there as you likely won't be living there for 95% of the years that you own the property. Also, this gives you more of an apples to apples comparison when looking at investments.

    3Reply
  • Daniel Fitzroy
    OP
    Member since 2019 · 110 posts · 80 votes
    5y

    @Jerome Jackson

    Thank you both for the advice I really appreciate it! I do think I’ll be in a better position when we buckle down, pull our credit/get pre approved in a few months or so. So waiting it out a bit is an option but I’m also willing to hustle and I’ll be super motivated to be more creative. So I’m also not against being creative. I’m not able to do the rent by the room option as my girlfriend and I have a 7 year old so the only option for a single family home would be a house with a mother in law. Also I could put down 20 percent in order to do a rent by the room single family If we weren’t living there but again I’m pretty dead set on a duplex/triplex somehow.

    0Reply
  • Daniel Fitzroy
    OP
    Member since 2019 · 110 posts · 80 votes
    5y

    @Dan Weber

    Thank you for pointing this out I’m being super conservative perhaps even too conservative. I’m factoring an estimated 200 a month bill for trash (3-4 yard dumpster) or something because I forgot to mention I’m hoping to find a duplex out in the woods ish. I’m buying a plow for my truck so I will manage snow removal myself but I am adding a lot, say 10-15 percent for maintenance because the price point for these duplexes around here just on a quick glance appear to be around like 250k for an old home needing some updating and minor repair. So my point was I’ve added in all these estimated monthly expenses and wasn’t even close to zero a month in bills however it does look much better once I look at it your way this helps a lot thank you. I’m anxious to find out if a bank will even loan us that much (250k) between my girlfriend and I earning 30,000 a year estimated each. I think it’s possible. I’m super excited about it. Can’t wait. What else am I missing?

    0Reply
  • Daniel Fitzroy
    OP
    Member since 2019 · 110 posts · 80 votes
    5y

    @Dan Weber

    Furthermore you’re right we don’t plan to be here long we are using the extra income from this rent hack combined with my 500 a month truck payment I no longer have to dish out to purchase our second duplex.

    0Reply
  • Griffin SchermerPro Member
    Investor · Bloomington, IN · Member since 2019 · 76 posts · 55 votes
    5y

    If you know the area you want to be in, and you're choosing between a SF or Duplex/triplex it may come down to the numbers. If the deals and numbers in your area aren't working then you might just want to think about what will cost me less (SF vs. Duplex/triplex)? or can I live in a different market? A duplex/triplex will likely cashflow after you move out. If it won't cashflow even after you move out, it might not be the right deal. You may also consider a short term rental as an option with a duplex/triplex. 

    2Reply
  • Daniel Fitzroy
    OP
    Member since 2019 · 110 posts · 80 votes
    5y

    @Griffin Schermer

    Ok awesome thanks so much for this advise it makes sense.

    0Reply
  • Jerome JacksonPro Member
    Investor · Hudson Valley, NY · Member since 2018 · 26 posts · 11 votes
    5y

     @Daniel Fitzroy I understand. I also wanted to share this with you as well, the below screenshot shows the historic Active Listing by Year and Month. I think it is a great chart to reference in regards to fine tuning your search process when looking for on-market deals. 

    0Reply
  • Cole Simpson
    Rental Property Investor · Columbia, SC · Member since 2020 · 302 posts · 186 votes
    5y

    So when you say does not cashflow do you mean while you are living in it or after?  Because the point of a house hack is not to cash flow it is to decrease living expenses, so if you can live in a duplex for 400 dollars a month instead of paying 1000 in rent that is a win.

    1Reply
  • Daniel Fitzroy
    OP
    Member since 2019 · 110 posts · 80 votes
    5y

    @Cole Simpson

    Yes that is correct, I was going under the general assumption that while living there the other unit(s) would provide enough income to get my total expenses as close to zero as possible. My girlfriend swears it would be cheaper to buy a single family and live in it for a couple years while fixing it up as a live in flip. But I’m still pretty sure a duplex/triplex can work too but I guess it boils down to analyzing the two in comparison to see what the numbers look like. Ide rather move into a paint/carpet multi family and quickly fix up/rent out the other unit than to do a live in flip but I will if I have to. Just trying to figure out as much info as possible and you guys are helping me think of things I haven’t considered.

    0Reply
  • Andrew Carlson
    Rental Property Investor · Rochester, MN · Member since 2017 · 224 posts · 323 votes
    5y

    @Daniel Fitzroy

    I would do a live in flip. Find a house on the MLS that is functionally obsolescent, meaning it is move in ready, but needs updating. Start doing the renovations room by room until she's all buffed out. By the time your done with renovations, you'll be at your 1 year mark in the home and you can sell to buy another one. Or use your new found sweat equity to buy a rental.

    1Reply
  • Brian G.
    Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes
    5y

    @Daniel Fitzroy if you can buy a quality asset that greatly reduces your monthly housing cost that is a win in my book, ie as long as you are paying significantly less living in one unit of a house hack duplex than you would be renting the same unit then that’s a big step forward. If the property would not cash flow once both units are rented out in the future (when you move out to do it again!) then it’s a no go, however don’t forget to consider potential rent appreciation in your underwriting. Don’t know your market but current rents will not likely remain stagnant.

    1Reply
  • Daniel Fitzroy
    OP
    Member since 2019 · 110 posts · 80 votes
    5y

    @Andrew Carlson

    Good advise about the paint/carpet. Thanks! So I would have to purchase the property using the 70% rule as a guide to start with correct? I know my location criteria it has to be located within a 45 min tops driving distance to my girlfriends work. What about a mother in law apartment single family home? What is that term meaning? Is it two fully separate units in a single family home? How would that differ from a duplex? Or is it basically the same thing as the rent hack type of living where you would presumably share a kitchen or bathroom ? What other strategies besides paint and carpet rehab are there to keep in my “tool belt”? I’ve heard of “pop topping” where one builds another story which is a bit out of my league for first time but what about perhaps if there was a garage and you could do something with that perhaps rent it out or something?

    Thanks just thinking outside the box here

    0Reply
  • Stephen Brown
    Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
    5y
    Originally posted by @Dan Weber:

    @Daniel Fitzroy how are you analyzing your house hack? You said you're looking for a cash flowing house hack. So, are you looking for it to cash flow while you live there? That's unlikely to happen with a duplex. Generally, if I'm house hacking, I would ideally like the other unit(s) to cover my PITI and then cash flow nicely when I move out. If you house hack a 4 unit building, then you may get some extra cash every month while you live there after you pay the bills. When analyzing, I'd run your numbers like you are not living there as you likely won't be living there for 95% of the years that you own the property. Also, this gives you more of an apples to apples comparison when looking at investments.

    The way you articulated this is exactly how I've always been trying to say it to myself!

    0Reply
  • Dennis Wayne
    Member since 2020 · 339 posts · 356 votes
    5y

    If it doesn’t cashflow don’t buy it , it’s really that simple ! Look if you take on debt and risk you need to be paid for that , if you are not being paid then don’t do it .

    1Reply
  • Daniel Fitzroy
    OP
    Member since 2019 · 110 posts · 80 votes
    5y
    Originally posted by @Dennis Wayne:

    If it doesn’t cashflow don’t buy it , it’s really that simple ! Look if you take on debt and risk you need to be paid for that , if you are not being paid then don’t do it .

    i agree and im trying to look at it from everyones angle. i guess the problem im running into is that in my high priced market if i purchase a duplex and rent out the other hypothetically lowering my bills to say 800 a month or do I buy a single family house that costs hypothetically 1200 or so. In that scenario im still better off renting a duplex and living in the other. I'm trying not to chase after too many things. I dont want to get distracted by too many strategies. I know theres 600 ways to get started. dennis what do you suggest I do maybe wait it out for the market to drop a bit like someone else suggested or would it be ok to try a live in flip? or some other method? thanks. everyones opinion is appreciated.

    0Reply
  • Daniel Fitzroy
    OP
    Member since 2019 · 110 posts · 80 votes
    5y
    Originally posted by @Joshua Nowell:

    Have you thought of renting by room to improve income?

    I apologize for the late response, I personally do like the rent by the room strategy however I have a son and my girlfriend doesn't like the idea. I cant say as though I blame her so unfortunately this method is out of the question for us at the moment. But this is definitely a good alternative for some,thanks for posting!

    0Reply
  • Dennis Wayne
    Member since 2020 · 339 posts · 356 votes
    5y
    Originally posted by @Daniel Fitzroy:
    Originally posted by @Dennis Wayne:

    If it doesn’t cashflow don’t buy it , it’s really that simple ! Look if you take on debt and risk you need to be paid for that , if you are not being paid then don’t do it .

    i agree and im trying to look at it from everyones angle. i guess the problem im running into is that in my high priced market if i purchase a duplex and rent out the other hypothetically lowering my bills to say 800 a month or do I buy a single family house that costs hypothetically 1200 or so. In that scenario im still better off renting a duplex and living in the other. I'm trying not to chase after too many things. I dont want to get distracted by too many strategies. I know theres 600 ways to get started. dennis what do you suggest I do maybe wait it out for the market to drop a bit like someone else suggested or would it be ok to try a live in flip? or some other method? thanks. everyones opinion is appreciated.

    Depending on how much you have saved I’d find a off market distressed property within an hours drive preferably a multi family  fix it up and rent it out .even in a hot market you can usually find stuff within an hour drive in lower income areas that can do well by the numbers . Don’t waste time looking on the mls if your on a tight budget . Market for distressed property and learn the methods of creative financing ! Your dollars can stretch much further with simply having the right education 

    0Reply
  • Daniel Fitzroy
    OP
    Member since 2019 · 110 posts · 80 votes
    5y

    @Dennis Wayne

    ok thanks. I could possibly find a home and do owner financing, and keep dumping weekly cash into it from my day job to rehab most of it myself although this would be a slower approach. Or I could use fha loan 203k and go that method. Those are the methods I currently understand and would use. I wouldnt mess with hard money yet because i feel its too risky. I dont know how to market for a home but I know theres a million posts and videos about methods such as driving for dollars. looking on google maps and mailing letters so I could start with one of those. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free