Negative cash flow on my first duplex property house hack

7 Replies

Hi everyone, I'm looking to buy my first multi family in the coming months and have read all about cash flow, 1% and 50% rule. I am still wondering is it bad deal if i buy a duplex that covers most of the mortgage but not all of it? For example, the mortgage is $1000 and i can collect rent for $750, leaving me to pay the remaining $250 for the mortgage plus utilities. Ideally we all want positive cash flow but with house hacking, i feel like that will be harder to obtain also living in the property. 

I am looking for opinions for those of you who have come before me if y'all would do something like that. Thanks

@Kobey Heberling this is a great question. Right now, it is pretty hard to find properties that will meet the 1% rule so anything around 0.7% would still be a good deal. I am sure you could find a duplex were you can pay less then $250 or even make a profit, but that would take so time from you to find that deal. If you are fine with paying $250 a month and this is one of the best deals for a duplex in your area, I would say it would be fine to do that. I would also look down the road, and see once you move out of the duplex would it be a good rental then. If I can help you with anything else let me know. 

Positive cash flow is not mandatory if you're expecting a huge appreciation or other benefits....but $250 + Insurance and taxes and utilities? Now you're down at least $600 a month.....

Pass.....

I don’t think ANYONE read the title of your post or even the body of it. 

OBVIOUSLY if you’re only renting out half of it and living in the other half. You have to pretend you are paying market rent when running the numbers. Heck, it’s actually better than that since your not paying rent with after tax dollars. Instead of earning $900 to pay $600 in rent you are simply covering the $250 shortfall instead. Sounds like a big win. 

Very few properties have good numbers half empty. 

@Kobey Heberling I happen to agree with a few people above. Act like you are the second tenant. Thats what I do, no one gets to live rent free, you are the cash flow in a way. I match my rent to theirs, cover my portion of the mortgage, the utilities, the rest goes into savings for repairs. If you keep the place up, once you move out and decide to rent both units you already have it budgeted, self sustaining, and it has a savings account for fixes so depending on how long you stayed and what you fixed, now it can make you money or you can start paying your premium down every other month. I found thats what worked for me in my duplex.