When running numbers for a house hack

[Tim Duffey]

Hi guys, 

I am searching for a house hack in my area. When I run the numbers to see if it cash flows, should I run it while I am living there or if I should run it like if I wasn't moving there, (like when I move out eventually). Because I have ran numbers on properties without me living on the property and none are good cash flowing properties initially.

Also, for my 1st rental property and house hack, do you guys focus a lot on cash flow by the way? I've been told for a house hack and me living there for a few years, it is more of a long term growth. Which my CoC would be positive in 5-10 years. But would start off in the negatives pretty well. Curious if I should have a different mindset when house hacking on my CoC, ROI, and cashflow. I like to live in a good neighborhood where crime is low which where I live my cashflow will suffer. Seeking any advice an have with their previous house hack and how it worked out for them with there cashflow, ROI, and CoC. Thank you.

[Sebastian Hernandez]

Hey Tim, I am very familiar with house hacking as I’ve done it myself. My suggestion is that you run your numbers with both scenarios. You want to make sure that once you move out and both units are rented, the house is generating cash-flow. I am very simple with this stuff, I just want my rentals to generate at least $700 in pure cash flow. 

Now, you should also run the numbers while you live in the property. You most likely will not cashflow at all. However, you will see that the tenants rent should cover the majority of your mortgage. The idea is that your “rent payment” payment will be significantly lower than if you were actually renting a house. For example, if you house hack, you contribute $700 towards the mortgage. If you rent, you pay $1,900. Thus house hacking is saving you $1,200 per month!

Hope this makes sense!