newbie analysis paralysis - which numbers matter

[J J Moody]

I am considering getting into real estate investing through House Hacking. 

I currently own a property that I would turn into a long-term rental after I move into a new primary residence. Then I would be renting a room or two in my new primary as a short- or mid- term option and eventually grow from there.

My question is related to analyzing the new primary. 

Should I be concerned with potential cash flow of the new property? Since I will be living there for a while I am thinking cash flow would not matter at first, instead appreciation would be a more important factor. How should I assess the potential ROI or cash flow of that property once I am ready to move it to a full-time rental? Would you use whatever is left on the loan amount to analyze the return or would you use the original purchase price?

Looking forward to feedback from the community!

[Jon Schwartz]

Quote from @J J Moody:

I am considering getting into real estate investing through House Hacking. 

I currently own a property that I would turn into a long-term rental after I move into a new primary residence. Then I would be renting a room or two in my new primary as a short- or mid- term option and eventually grow from there.

My question is related to analyzing the new primary. 

Should I be concerned with potential cash flow of the new property? Since I will be living there for a while I am thinking cash flow would not matter at first, instead appreciation would be a more important factor. How should I assess the potential ROI or cash flow of that property once I am ready to move it to a full-time rental? Would you use whatever is left on the loan amount to analyze the return or would you use the original purchase price?

Looking forward to feedback from the community!

 JJ, I house hack and work with house hackers in a very expensive market. Analyzing house hacks is difficult because it's partially an investment, partially your cost of living.

The three metrics I focus on most with my clients are net cost while living in the house hack, period of time until you can move out and enjoy positive cash flow (it can take a few years in LA!), and cashflow once you move out.

You really have to weigh the house hack against other living alternatives -- like buying a house traditionally or renting a comparable unit.

I know these aren't concrete answers, but I hope this helps guide your thinking!