My name is Rylee, and I am looking into purchasing my first rental property using a FHA loan, using the house hacking method. As you know the prices in Massachusetts are ridiculous, but so is the rent. Average rent for a month with 3 people is about $2,900 where I am looking. I have been hearing some different things and I just want to make sure I am thinking right. So my cash flow would be what I would not be paying on rent right ? I have run my numbers a few times to me it almost seems like I would be doing a little better than breaking even about 6% ROI. Is it worth it ?
Hi @Rylee McGuire , cash flow would be any profits after expenses (including mortgage, taxes, utilities, etc). I am currently house hacking in Massachusetts myself, although I am not cash flowing, more or less subsidizing my mortgage through roommates. Average rent should be based on the property or bedroom count not necessarily the people count. Also if you need assistance in running rental numbers you can message me directly and I can send you some more information.
As an owner occupant look at it two ways with you living there and without you living there.
Cash flow is profit after expenses. It is rare in eastern MA that it would cash flow not considering the value to the owner occupant in not paying rent.
- Calculate what does it look like when you live there now with roommates considering you would be paying rent otherwise.
- Calculate how does it cash flow after you move out (with or without re-financing) Good luck.
You have already got some good advise, Rylee. But adding to Colleen F's point, you may add some extra money for contingency that will also go on the expense book per month that will cover vacancy, repair needs etc. Good luck.