House hacking Boston suburbs 20% down

[Kyle Frey]

Hello BP forum,

I am an aspiring RE investor and wanted to post my plans and get some feedback. 

My wife and I moved out here to San Diego from Boston, and in an attempt to stay here we put our nest egg down on a single family home, only to still struggle to keep up with the mortgage. We are considering selling this spring and moving back to be close to family, and to go for a house hack.  Upon selling, we will have enough for a 20% down payment and some cushion to cover some starting negative cash flow, but still want to make sure that we are making a good investment.

I'm new to looking at numbers and have just been practicing on Zillow/realtor and plugging houses into Dealcheck. I've been focusing on Triplex's since duplexes seem to really not work (numbers wise) and four-plex's are hard to find. Anyways, whenever I look into a house, cap rate seems to be in the 4%'s using their defaults for all of the expenses and stuff. I've edited out property management, as I plan to do it myself. Here are a few questions:

1. These investments can be anywhere from poor to excellent when adjusting the appreciation rate. I've read that you do not want to rely on appreciation, but also read that in expensive markets, appreciation is your main driver. Where should I set it when analyzing a deal?

2. Does needing to put 20% down to make a deal reasonable mean that I'm just on the wrong track? I can look further from Boston but don't want to change our lifestyle too much. We will have a dog and newborn with us. 

My current neighborhoods that I've been searching have been mostly Somerville, Jamaica Plain, Dorchester, Everett, Quincy. I am open to houses that need some light work, and would even prefer that, as I've enjoyed small projects around the house. I don't know any construction or have and connections to contractors yet. 

What do you guys think? Thanks!

[Jason Wray]

Quote from @Kyle Frey:

Hello BP forum,

I am an aspiring RE investor and wanted to post my plans and get some feedback. 

My wife and I moved out here to San Diego from Boston, and in an attempt to stay here we put our nest egg down on a single family home, only to still struggle to keep up with the mortgage. We are considering selling this spring and moving back to be close to family, and to go for a house hack.  Upon selling, we will have enough for a 20% down payment and some cushion to cover some starting negative cash flow, but still want to make sure that we are making a good investment.

I'm new to looking at numbers and have just been practicing on Zillow/realtor and plugging houses into Dealcheck. I've been focusing on Triplex's since duplexes seem to really not work (numbers wise) and four-plex's are hard to find. Anyways, whenever I look into a house, cap rate seems to be in the 4%'s using their defaults for all of the expenses and stuff. I've edited out property management, as I plan to do it myself. Here are a few questions:

1. These investments can be anywhere from poor to excellent when adjusting the appreciation rate. I've read that you do not want to rely on appreciation, but also read that in expensive markets, appreciation is your main driver. Where should I set it when analyzing a deal?

2. Does needing to put 20% down to make a deal reasonable mean that I'm just on the wrong track? I can look further from Boston but don't want to change our lifestyle too much. We will have a dog and newborn with us. 

My current neighborhoods that I've been searching have been mostly Somerville, Jamaica Plain, Dorchester, Everett, Quincy. I am open to houses that need some light work, and would even prefer that, as I've enjoyed small projects around the house. I don't know any construction or have and connections to contractors yet. 

What do you guys think? Thanks!

Kyle,

You hould reach out to @Christian Welch he covers Boston, All of MA, NH, VT, MN and has found my customers a ton of cash flow properties with solid ARV potential.