Beginner- Does this look like a good house hack?

Question

We are moving to SE Houston / Baytown area in the spring. I'm trying to analyze available properties for house hacking. Did I lay this out right?

https://www.zillow.com/homedetails/1309-Jefferson-St-Baytown...

I would say this is a B area? Certainly felt safe enough to move my kids into with good school district but older homes.

Asking $319k, I ran numbers with 10% down, 7% rate, $6k closing costs. We would obviously try to get lower than listing.

Unit 1 - 3 Bedroom & 2 Bathrooms - 1196 sf - Previously rented @ $1550/Month. <- We would occupy this unit
Unit 2 - 2 Bedoom & 1 Bathroom - 818 sf - Previously rented @ $950/Month
Unit 3 - 2 Bedrooms & 1 Bathroom - 741 sf - Previously rented @ $1250/Month

I ran a rental calculator using a rounded up tax $1500, $2000 insurance, 5% vacancy, 5% maintenance,  and rents listed. I get a cash flow of -$224per month with a mortgage payment of $1916. We can easily pay the whole mortgage if needed. Cash flow would be $1177 per month once we move out.

Is small negative cash flow while you live there but $392/door once you move out decent?

Would it make sense to put 20% down to have a neutral $0 cash flow while living there and $1390 or $464/door after we move out?

Crystal Smith · Answer

Schedule E or Schedule C

Eyal Goren · Answer

This is my calculation for 10% down. Try to get your all in to around 270k.

https://brickbear.ai/share/deal/24/JfPVOIlRy1h

Jennie Ballard · Answer

Do you mean Schedule C business loses or something different? I have a experience with Schedule C for my husband's side hustle. I haven't dug into IRS website about landlord specific taxes yet.

Benjamin Louie · Answer

Looks like you’re crunching the numbers really thoroughly, nice work!

A small negative cash flow while living there isn’t unusual for house hacking. Think of it as paying a little to live for free (or very cheap) in your primary unit while building equity in the other units. Once you move out, $392/door is decent, and $464/door if you put 20% down is even better.

Going with 20% down just to hit $0 cash flow while living there is fine if you have the extra cash, but I personally think it’s not necessary unless you want the absolute safety of neutral cash flow. That small negative can be manageable, especially if you can cover it and know rents are likely to rise over time.

One thing to double-check: make sure the units are still renting at the numbers you used. Sometimes older listings reflect rents that are slightly outdated. Also, factor in HOA (if any), utilities you might pay, and any unexpected repairs in older homes.

Overall, your approach looks solid, sounds like a good house hack opportunity!

Aaron Zimmerman · Answer

Living there and only being out of pocket 224 per month is amazing. You stated yourself the unit was previously listed for $1,550, so you're saving at least $1,300 per month in rent, so I'd view this as a HUGE win. And the fact that it will cash flow upon moving out is big too.

Id keep the down payment as is and use those funds plus savings to buy into your next property/house hack

Ricardo R. · Answer

Hey Jennie,

I looked at what you laid out, and honestly, the way you’re running the numbers makes sense—it’s exactly what I’d do before buying a house hack. Here’s how I’d think through it if it were me:

• Negative cash flow while you live there:
A small negative (like your $224/month) isn’t the end of the world if your goal is long-term cash flow once you move out. It’s basically the price you’re paying for reduced housing costs now plus getting the asset started. Most people consider that a win if the numbers look good after they move out.
• After you move out:
$1177/month net, or about $392 a door, is solid for a property you lived in first. Many house hackers would be happy with anything over $200–250/door after they move out, so you’re above that bar.
• 20% down vs. 10% down:


20% down = better cash flow now, but locks up more of your cash.


10% down = smaller upfront hit, keeps more money in your pocket for reserves or the next deal.
• 20% down = better cash flow now, but locks up more of your cash.
• 10% down = smaller upfront hit, keeps more money in your pocket for reserves or the next deal.

Negative cash flow while you live there:
A small negative (like your $224/month) isn’t the end of the world if your goal is long-term cash flow once you move out. It’s basically the price you’re paying for reduced housing costs now plus getting the asset started. Most people consider that a win if the numbers look good after they move out.

After you move out:
$1177/month net, or about $392 a door, is solid for a property you lived in first. Many house hackers would be happy with anything over $200–250/door after they move out, so you’re above that bar.

20% down vs. 10% down:

• 20% down = better cash flow now, but locks up more of your cash.
• 10% down = smaller upfront hit, keeps more money in your pocket for reserves or the next deal.

20% down = better cash flow now, but locks up more of your cash.

10% down = smaller upfront hit, keeps more money in your pocket for reserves or the next deal.

If you can comfortably cover the negative while you live there, I’d lean toward 10% down so you keep cash on hand for surprises or another property later.

• The area question:
Baytown B areas with good schools usually stay pretty stable on rents. Even if appreciation is slow, the rental demand tends to stay strong.

The area question:
Baytown B areas with good schools usually stay pretty stable on rents. Even if appreciation is slow, the rental demand tends to stay strong.

If it were me, I’d confirm:

• What real rents are today (not just past ones).
• That taxes/insurance are accurate—those kill cash flow if they jump.

What real rents are today (not just past ones).

That taxes/insurance are accurate—those kill cash flow if they jump.

But based on what you posted, the deal seems reasonable for a house hack that becomes a solid rental later; @Jennie Ballard I hope I was able to help you a little and shed a different perspective, I sent you a DM on BP and hope you are able to assist. Thank you.

Beginner- Does this look like a good house hack?

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