Investment Variables for House Hacking Oakland, CA
Hello everyone, my name is Hassan and I'm defining investment strategies to House Hack in Oakland. I'd appreciate if anyone can provide input on variables I'm using below. What adjustments, if any, should I make? If it helps to have more concrete details, we could consider a 700K-1M purchase that I occupy with 4-5 rooms that I rent. All feedback is welcome and hopefully this helps others too!
- Interest Rates: 7%. If I'm calculating correctly, this really hurts for investment potential but I'm hopeful that sometime in the next 3-5 years I can get to 5%.
- Vacancy Rates: 8%. I started with 5% but bumped up to account for having 4-5 rooms.
- Annual Rent Increase: 3%. I'm really not confident on this estimate since I've seen some recent updates that CPI also factors in (might reduce rent increases) but there also might be ways to increase rent by up to 10% with 60-days notice.
- Annual Expenses Increase: 3%. I considered that 4% or 5% might be better due to high inflation, but I'm not sure how you all think about this.
- Annual Appreciation: 4%. I'm not sure what to input here.
- Property Taxes: 1.4%. I believe there is also a 2% cap on increased cost per year because of Prop 13. My understanding is that Property Tax is reassessed each year to be 1.4% of the home's newly assessed value that year but also the net annual cost increase is capped at 2%.
- Property Management Fees: 10% of Rent Revenue. Is there any way to get a better rate here? I think I've heard of 8% in the past.
- Expenditures: 10% of Rent Revenue
- Insurance: $1,500 Annual. I'm not sure here and saw a lot of different estimates online from 1-2.5K.
- Utilities: $600 Monthly. I thought $300-400 might be more standard, but $600 could help to account for multiple renters.
- Closing Costs: 3.5%. I was not sure how to best calculate this. I've also read that Transfer Tax is covered by sellers, so I'm not including that in my costs.