Your House Hack Experience in NYC Boroughs

[John Michael]

Hi, I'm new to BP and have been reading about house hacking on the site, using the calculators, etc. When I use the rental property calculators with the assumptions below, most properties in my area cash flow negative after servicing the mortgage. I guess I look at the long term appreciation as the benefit of house hacking if I cannot get it to cash flow positive unless I'm looking at it the wrong way. What are your thoughts out there? I'm looking to buy a REI multifamily in my local borough in NYC and house hack it by living in it for 2 years to meet the following 2 requirements: 1) FHA's 1-year occupancy requirement and 2) 2-year land lording experience for the next loan My search experience has been that many two-families for sale today in my area are going around the 600-800k range. Rents average $1,500 (apartments) and $2,500 (main portion of house). Therefore the high prices cause the house to not cash flow well. I'm sure there's things I didn't even factor in below. Purchase Price - $650k 3.5% Down - $23k Upfront PMI - $11k (1-2%) Closing Costs - $17k (2-3%) Upfront Costs - $50k Interest Rate - 4.15% Rents - $48k/yr or $4k/mo Real Estate Taxes - $7k/yr or $600/mo Home Insurance - $1.2k/yr or $100/mo Monthly PMI - $4.8k/yr or $400/mo Vacancy (2%) - $1k/yr or $80/mo Repairs/Maintenance (5%) - $2.5k/yr or $215/mo Capital Expenditures (5%) - $2.5k/yr or $215/mo Total Operating Expenses - $19k/yr or $1.6k/mo NOI - $29k/yr or $2.4k/yr (4.5% cap rate) Mortgage - $36k/yr or 3k/mo Cash Flow - ($7k)/yr or ($600)/mo (-15%) COCR $650k appreciating at 1.5% annually would estimate the future property value to be around $1-$1.5mm. My projected costs would be: -50k upfront cost/investment -$40k for 2yrs of living in one unit -$200k negative cash flowing ($7k)/yr for 30 yrs -$100k other random unexpected costs -$400k for Total all in costs throughout process Net Profit $1.2mm - $650k - $100 (closing) = $450k Total Return $450k/$400k = 105% or 3.5% annual