Analyzing Multi-Family deals using an FHA loan

[Stephanie Sicard]

Hi everyone, 

I am a newbie investor and I have been spending a lot of time analyzing deals. I have analyzed deals using conventional loans and have had great results. When I analyze deals using an FHA loan, that's when I start running into issues. When I use BP's rental property calculator, I am constantly getting negative cash flow reports. I know when you house hack you are losing rental income because you are living there, however, is there a possibility to make any cash flow? Or is the 1st year of house hacking more so to help you save, because you will technically be living for free? When analyzing with an FHA loan, do you analyze as if that first year was already over and both units could be rented out?

Thanks for all your help in advance! 

[Jonathan Greene]

You have to think outside of the calculators and formulas. They only help you so much. How many properties have you analyzed using these methods? Of those properties, how many did you see in person? How many properties have you done a full walk-through of? If the answer is 0 or less than 10 percent, stop analyzing properties from a computer and go see them in person. No first-time investor should buy anything without looking at 50-100 properties first so they know what they are getting into. Agents may not want to show you 25 crappy multi-family houses, but that's what it takes to learn. A calculator on BP won't prepare you for house hacking, neither will these forums. Because until you are in your first investment, it's all what could happen, what the costs should be or could be. Then your sewer line breaks and all of that pre-analysis you've done doesn't matter. Use the formulas to help your mind, but go see as many properties as you can to help your real-life confidence in how it will work.