Analyzing a houehack for now and later.

4 Replies

When purchasing a house hack do you run the numbers in the instances of being an occupant and later when you plan to leave the property? Also since I am deployed I am looking at mainly properties on MLS. What I'm seeing when I run the numbers on the BP rental tool is that most properties I would have to purchase at 65-70 percent of the retail value to cashflow. The cash on cash ROI is usually pretty high, typically between 16-22 percent but the cashflow really is only around $150-$200 per month. What are others shooting for as far as monthly cashflow? I know markets dictate but I'd love to hear some expert opinions. Also What are most people using to find accurate property ARV's? Im a little leery with trusting zillow. Thanks everyone and I look forward to hearing any advice!

cheers, 

Anthony Warren

Hi @Anthony Warren ,

First off, thank you for your service.

When we bought our first property (owner-occupied duplex, through a realtor) we wanted to live in a nicer neighborhood. Nicer neighborhoods are more expensive, and the only cashflowing duplexes within 20 miles were in not-so-desirable parts of town. 

We changed our strategy and instead chose to make our profits from Appreciation, not cashflow. Appreciation isn't as predictable as cashflow, but then we got to live in a very desirable area. Our tenants' covered 60% PITI, meaning we paid 40% out of pocket but got to live in a great area.

Our gamble paid off and sold for 20% more than we bought 2 years prior. Those types of gains are an anomaly, but the principle still applies.

Excited to hear what you take action on!

@Nathan Platter I understand completely. I have thought about the very idea that we may not be able to cover the full amount of PITI but we will live for a heck of a lot less than we would otherwise. My wife is going to look at a duplex today that is pretty big 3 beds 3 full baths and 2 car garage. I have run the numbers and it comes close to that 60/40 mark. It should also provide good passive income when we decide to move as well. I haven't decided if I want to go FHA or VA for financing which obviously changes the cash on cash ROI. I don't want to miss on properties because I feel greedy so I feel like at this point if I can have the majority of the mortgage paid for and I lower my cost of living that it would be a great way to slide my foot in the door.

Hi @Anthony Warren ,

Your mortgage broker will be the most up-to-date on best reach your acquisition goals, but if my memory is correct, start with a VA (0% down) loan. After 12 months, you can then move out (no rush) and then get an FHA (3.5% down) loan, perhaps another 2-4plex. After yet another 12 months, you can move out and either rent or get a Conventional (5% down) loan.

But you have to go VA and then FHA, VA to FHA isn't allowed (if my memory is correct)

25 months from today, you could have two 2-4plex properties that are paying for themselves plus (potentially) a little cashflow, with very little down to get there.

As a US veteran, you are given the most opportunity for House Hacking.

@Anthony Warren Thank you for your service! Let me preface this with the fact that I am NOT an expert. I only have one property so far, but I am in the same boat as you. Searching for a house hack/duplex, and trying to understand how to analyze these properties the correct way.

From what I have read and been told, you should analyze the deal as if you are not living there, and run the numbers that way.

For me, I plan to be in the place long term so I am being a bit more patient than usual as the area is the most important aspect for me.  But I agree with you. I would love to hold out for a deal where the numbers were killer, but I haven't seen anything yet. 

One thing that does help with numbers is if you go the airbnb route. I.e- I plan on fully renting one unit, and then also renting out a second bedroom in my unit to help with the cash flow. Probably not the ideal situation for everyone though.

I am also trying to strategize and come up with some creative ways to find off market deals. 

At any rate, good luck and hope that helps!

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