What would be ideal Cash on Cash Return when housing Hacking

Question

My girlfriend and I are going to purchase a Duplex in the general Sacramento Area of CA. Being that I am in California and its not the easiest to cash flow what would be an ideal target for my Cash on Cash return to be?  I know that its okay to be cash flow negative at first but when analyzing a property I am not sure what a general percentage I should be looking for. Thanks in advance for any and all help.

Conner Olsen · Answer

I only use CoC when I move out as a metric, that depends on your market. I put more emphasis on NWROI when calculating.

Nate Sanow · Answer

I’d run that analysis on the move out, personally.

Daniel Vallejo · Answer

Hey Tristan,

I'm doing a house hack myself currently. But I want to give you a different perspective to look at a house hack rather than seeing a CoC return. Ultimately, calculating cash on cash returns for a property consist of a few variables. And one of those variables is initial investment. Since you will be paying partial of your mortgage that initial investment turns more into a holding cost that changes for every dollar of your own money that goes towards the mortgage. Therefore, CoC at the first month wont look as great at month 10, 11, 12 and so on.

So I am looking at my own house hack strategy as Bill is referring it to, which is to get my own living expense as close to $0 as possible. Then that would free up the rest of my W2 income to put into the next property.

Hope this helps!

Bill B. · Answer

Compare it to the cash on cash and cashflow of not house-hacking. (Either renting or buying and not renting any part out.) it should compare favorably.

Scott Scoville · Answer

Hey Tristan,

I'm an investor and real estate agent in Sacramento. I'd be happy to answer any questions. I DM'd you with my contact info.

Haley Dahlgard · Answer

Hey Tristan. I can help you analyze house hack properties in Sacramento, but it would be helpful if you shared more information. For example, Do you plan on moving out and then renting the whole property out at some point? If so, when? Do you need to cash flow when you move out? Have you started analyzing properties yet? If so, what have you been seeing?

What would be ideal Cash on Cash Return when housing Hacking

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