Cleveland House hacking

13 Replies | Cleveland, Ohio

Id say i look at and run numbers on at least 10 properties a day to learn how to better do analysis and i noticed a trend i feel only house hackers can answer. I see a lot of properties that can do decent cash flow to start in the Cleveland area but with one major exception. You lose so much rental income when you must occupy one of the units. When i apply the 50/50 rule for maintenance then apply the rest to property taxes,mortgage and homeowners insurance ive noticed cash flows will usually be negative about $150-$200 even when the property passes the 2% test. This seems like its quite common with house hacking but i am still determined this is the route i want to go to to the great benefits of the VA home loan. (no PMI is my favorite :} ). I just wanted to get an opinion from other fellow house hackers if living a little in the red is such a bad idea. after all paying about $200 a month out of my own pocket is still significantly different than my current $800 rent i pay.

@Brandon Metz Hey Brandon! I live out in California and am interested in the same idea of househacking a property but the market over here is very hot. Rarely can I find a property that when I run the numbers to pass the 2% rule and other number tests.

One thing that I can think of that may help is potentially offering a bit less for the acquisition for the property so that when you run the numbers your cash flow will closer to breaking even or even positive if the owner bites. Otherwise, the situation is not so bad after all because as you’ve stated already, $200 in the red is considerably better than the $800 of your current rent!

Also, the $200 that you’re in the red is going towards the equity in the property (so you’re paying yourself in equity) whereas the rent from the tenant in the other can be used to pay off mortgage, taxes, insurances, capital expenses, etc. If you sell off the property in the future, you’ll be regaining the $200 in the red that you had been paying each month through selling off equity in the property. Hopefully this makes sense and if there’s a flaw in my thinking in my explanation please let me know! Best of luck :)

@Brandon Metz When I house hacked a couple years ago, I saw it as saving money. I always need a place to live (cant live with my parents and didnt have a paid off house) so I was living in my duplex for lets say $150-200. Way cheaper than $1000 in rent. You are still "winning" in the long run as your tenant is paying down the mortgage. So in a way, you are cash flowing assuming you have another source of income and dont get to live elsewhere for free.

Okay the way I see it I can save a bit more for a year then at the end of my 1 year obligation as primary residence for a VA loan as soon as I move out to the next house hack I'm instantly making profit. I guess it may be asking too much to be positive right away but hey anything is possible if you search everyday

@Mo Weis I'm strongly looking for a duplex or quadplex that would be ideal but beating the cash offers from the already established investors is quite hard. I would come pretty close to breaking even or a small cash flow with a quad or tri but in reality a duplex may be what's most likely going to happen. I shall continue to search for new listings around the clock though as usual.

Paying only $150 to $200 for your housing is pretty great.

However, I solved that problem by also having a roommate in my side for $400. In my second house hack now. Been making a profit on my own housing for a few years.

Originally posted by @Brandon Metz :

@Mo Weis west side and I was looking at 200k and below for now

You remind me of OOS investor who bought property in CH 30K more than MLS, then was asking what to do with it. Some reality for you. No residential property in Cleveland worth more than 100K in long run. It is a failed city with the government that has no clue of what they are doing. And the county population is shrinking. The Cleveland population numbers are stable for the simple reason. They substitute the loss of population with expansion of public housing. Investors lock value when they buy. How about buying for 500 good property on East Side, assuming tax debt (less than 10K) and setting payment plan for the house with assessed value of 30K. Such deal will give you value and financing from the start.

@Brandon Metz depends on what area of W. side. If you are looking in Lakewood , yes you probably will be beat out by investors. also rents won't be high enough to fully cover mortgage. If you're going conventional rates have been the lowest in a while.

Yea thats what im saying $200 a month to have a house i only have to live in for one year. Id love to instantly make a profit but i think im just asking too much at that point. id pretty much instantly be green when moving out from my one ear obligation into the next property after a refinance. Id also have a whole year to force as much appreciation as i can. It seems enough people on this thread have done the exact same thing so looks like finding the best duplex deal is my best route. As always thanks to everyone so far on this thread all these multiple perspectives and tips from the more experienced ones are always a great help.