Hi BP,

I’m looking to house hack a deal. I know it’s ideal to have the other tenant’s payment cover your mortgage + taxes/insurance/maintenance/capex/vacancies, but it’s pretty tough given how expensive my market is.

How much are you guys paying out of pocket to cover the remaining monthly expenses after you receive your tenants payment?

Thanks!

Hi @Alex Nameishi and welcome! We live in a high cost of living market (Portland, OR) and our tenants pay 70 percent of our mortgage payment. 

House hacking is technically possible in ANY market. The question becomes how much can you save (or make) by house hacking. If you are using a low down payment, it's not really realistic to expect to be cash flow positive while you’re living in the property. When an investor is looking at being cash flow positive, they are typically putting down 25 percent or more. If you are in a high demand metro area, it's simply not realistic to expect to be cash flow positive while you’re living in the house if you are putting down 0-10%.

Now if that is all the capital you have, that is what it is....is it better to keep renting than to buy? Typically it is better to buy. Better to build your own equity through the debt pay down, enjoy the tax benefits of ownership, and garner the equity of an appreciating asset. You just can't expect to cash flow on an initial purchase with a low down payment. Now with time and rent growth, what could be a negative cash flow property might very well become a cash flow king, but that takes patience. Also, keep in mind that in my opinion, you would still be winning if your monthly housing costs went from $1,400 to $900… that would be the equivalent of producing an extra $500 a month in cash flow that you could save up for your next investment.

Another way to increase cash flow would be renting out rooms in the unit you live in, either Airbnb or longer term.

@Chace Fraser you make some great points and I appreciate the reassurance! Thinking long term rather than short term is always the right play. Thanks!