House Hack vs. Rental Property... What to do?

[Tom Desroches]

Hey Everyone!  I'm debating whether or not to have my first property be a house hack or to buy and have long term tenants.  I know this is very specific depending on location and property but I wanted to get some opinions from investors who have the experience already.

House Hack: Buy a house in the area we live in now (NY) with the average house being around $500k. Look to long-term rent the 3 bedroom part of the house and live in the 1 bedroom part of the house with my wife (which is what we do now but in someone else's house). As far as finances go; put down 3% plus closing costs which would be around $40k and we can rent out a 3 bedroom in our area for, on the low-end, $2,600/month. This would put an extra $1,000 into our pocket (mortgage + taxes + insurance + PMI) from our renting situation now and would give us an ROI of about 30% per year.

Long Term Rental Property: Buy a multi-family in another state (lower taxes, better tenants laws) for around $100k. Put 20% down plus closing costs which is around $25k and rent out all units by hiring a property management company. Depending on where the property is and what income it's generating I can probably assume $250/mo profit after all expenses and that'd give me an ROI of about 12% per year.

I know this is all hypothetical but if my finances and mortgages estimates are wrong please let me know.  That is my other concern too, is there a strategy with first time home buyers and taking advantage of specific mortgage programs?  Does it matter if i'm living in the property or renting it out?  Any information will help, Thanks!