Cash Flowing an FHA House Hack after moving out

[John Powers]

HI BP,

My roommate and I are looking to house hack in Austin within the next year or so. Our thought is that one of us would purchase our first property with an FHA loan, live there for a year or two, then the other will get an FHA loan on a second duplex, and we would rent out both units of the first duplex. Is it realistic to think we would be able to cash flow that first property after 1-2 years with an FHA loan?

Obviously, it will depend on the property. I ran some numbers on a duplex with a lender and this is what it looks like:

Property Price: $306,000
3.5% Down FHA loan @4%

Unit A Rent: $1,050 2 bedroom (We would live here)
Unit B Rent: $1,350 3 bedroom

Total Monthly Payments ~$2,125

• Includes: Principal & Interest, FHA mortgage insurance, homeowners insurance (estimated) and actual property tax
• Noted that tax and insurance can rise over time

Living in the house, our monthly payments would be ~$775 ($2,125 - $1,350).

Once we moved out, and are able to fill unit A with a new tenant, theoretically we would be cash flowing $275 ( - $2,125 + $1,350 + $1,050). On top of that, we would need to factor in other expenses like repairs, utilities, and vacancy.

Is it realistic to be able to cash flow a House Hack with an FHA loan after a year or two? What factors am I not accounting for here? Any feedback would be greatly appreciated!

Thanks,
John