House Hack in expensive market?

[Seth Michael Carp]

I am currently a high school senior and I'm currently learning and making money for an FHA loan to house hack in my sophomore year of college. I am going to be going to the University of Oregon, in Eugene. When running the numbers on pretty much all of the properties I looked at on Zillow, any multifamily options are either far too expensive or would not come close to cash flowing even after I would move out and refi. I've looked into single family for starting out, but even those seem to be a bit too expensive to cash flow after I would move out, however I've heard that prices will start to drop in the next year or 2 but I don't want to rely on people's opinions for my success. Median rent in Eugene is about 1750 and the median home price is about 482,000. Would house hacking in an expensive market still be a viable option or would another form of real estate investing be a better choice, thank you.

[Eric Yu]

Quote from @Seth Michael Carp:

I am currently a high school senior and I'm currently learning and making money for an FHA loan to house hack in my sophomore year of college. I am going to be going to the University of Oregon, in Eugene. When running the numbers on pretty much all of the properties I looked at on Zillow, any multifamily options are either far too expensive or would not come close to cash flowing even after I would move out and refi. I've looked into single family for starting out, but even those seem to be a bit too expensive to cash flow after I would move out, however I've heard that prices will start to drop in the next year or 2 but I don't want to rely on people's opinions for my success. Median rent in Eugene is about 1750 and the median home price is about 482,000. Would house hacking in an expensive market still be a viable option or would another form of real estate investing be a better choice, thank you.

These days, it's much more difficult to find properties that would cash flow right away in more expensive markets. For most of my clients, I try to find something where their monthly payment would be less than what they're paying in rent. In some cases, even if you're paying a little more than what rent would be, it's still worth it because you're paying down the mortgage & building up equity. 

Similar to what the other people have said, real estate is a long term game & over the long run, you'll likely be able to raise rents & get to a point where you cash flow. That said, what's happened in the past is not always guaranteed to happen in the future. Even though we've historically seen a trend of rents always going up, it's "possible" that could stop happening. If rents never increased, would you be okay? Do you have enough reserves to cover a case where you're cash flow negative & the price of the home drops 10%?

I'm not saying all this to be pessimistic; I think over the past few years, a lot of people got into real estate investing & saw fantastic results. Rates were low, prices were going up, it was almost impossible to lose in that market. Now, things are tightening up & it's important to be a bit more conservative. Make sure that you'll still make it out okay in the worst case scenario. As long as you have enough reserves to make it through 5-6 months, you should be fine. Be patient, buy right, and things should turn out okay.