Calculating Breakeven Point - Anyone good with excel/math pls help!

[Ryan Butler]

Hey Everyone,

Working on my first house hack and I'm using a spreadsheet someone on the forums was kind enough to give me to project income & expenses. It's been a massive help but the one thing I can't figure out is how to find my breakeven point so that I'm not negative cash flowing right away. Basically what I'm looking for is a formula that tells me what purchase price would get me to net positive based on my other inputs.

I have the monthly amount that I'm losing, so what I believe I need to do is lower the monthly mortgage payment by that amount and then back that out to the purchase price that would get me there. My math skills aren't what they used to be and I might be trying to do wayyy too much here but it seems like it should be more simple.

Here's an example

Mortgage Pmt: 5,435

Monthly Loss: 1,922

Breakeven Mortgage Pmt: 3,512

Mortgage Pmt Formula (In Excel): -PMT(Int Rate/12, Mortgage term * 12, Loan amt)

If anyone is a true excel/math whiz and can give me some help here I would really appreciate it!!!

Not sure how to attach a spreadsheet to this but if someone is willing to help I'd be more than happy to send it over

[Kyle Spearin]

@Ryan Butler I believe that the BP calculators can help you achieve what you're looking for. It's worth giving it a shot!

[Ben Einspahr]

@Ryan Butler. I understand your frustration. I remember when I first started out, trying to analyze properties seemed to get me nowhere and even more frustrated. A couple things:

-when you are analyzing, are you looking at numbers while living there or after moving out? After moving out are the key numbers you want to be looking at.

-their is much more to the investment than cash flow (appreciation, debt pay down, depreciation). The spreadsheet you are using must include that that into consideration too. Yes, cash flow is very important but it is the tip of the ice berg when it comes to house hacking while using a 5% down payment.

-if you are looking to decrease your mortgage payment, there are other options other then higher downpayment. Consider buying down the interest rate or prepaying PMI.

-Explore other options after moving out to increase rental income. STR ( if local rules and regs allow), Furnished MTR, or even rent by the room if you have 4+ bed home. Rent by the room is a very attractive investment strategy her in Denver to increase rental income in single family homes.

I know this did not directly answer your questions as i went on a bit of a tangent, but i hope you found value in it. 

I can send you spreadsheet I use when analyzing.

[Ben Rhodin]

Hey @Ryan Butler! Going to second most of what @Ben Einspahr said. He gave some great info on the other factors you should be looking at in terms of your house hack. Cash flow is a very small portion of REI, especially in a market like Boston.

The short answer to your question, you only have so many ways to manipulate your numbers on a deal and numbers you are in control of. Don't manipulate any expenses or fixed costs that you are not in control of. The only way to change the numbers on a deal are your purchase price, downpayment, or interest rate (either you buying it down, or the seller buying it down); and your income... if you can change strategy and increase your rental income you can increase your cash flow. What I would do is keep adjusting your purchase price down until the deal makes sense for your numbers, then you can go from there, a rate buy down will always be better bang for your buck and be more appealing to a seller. 

Don't ever fudge your expenses on the property to make the deal work, as that is a quick way to get in trouble. and as the other ben mentioned, make sure to run your numbers on when you occupy, and when you move out, as even if yu are negative while you are living there it may be worth it, as you are taking up one of the rentable areas.

[Bonnie Low]

Have you tried using a program like Deal Check. It's about $100/yr for unlimited deal analysis. Depending on the criteria you set, like your expected COC, ROI, rent to value, etc. it will tell you the max you can offer and details out everything from the purchases costs to holding costs to cash flow to your max allowable offer given the variables you put in. We use it all the time.