Is it okay to not cash flow? (Young and Dumb investor)

[Matt T.]

Hi everyone, young inexperienced guy looking to break into real estate investing. I live and work in the Boston area and I am looking to move out of my parents place within the coming year. I wanted to get your thoughts on “House Hacking” and buying a property that will not cash flow (even after I move out). My plan is to skip the renting phase by living at home and jump right into the owning phase.

Here is my plan.

• -Stay at home and save for another 12-15 months
• -Use FHA financing to buy a first multifamily property (2-4 units)
• -Live in one unit while renting out the rest
• -Pay down mortgage for 1-3 years, refinance FHA status into a conventional loan
• -Apply for another FHA loan and repeat the same process in another property

Obviously it would be better to buy and find a property that can cash flow. But it may be unlikely because I am not experienced with construction/repairing houses (can’t buy anything that needs major work), I do not know any real estate agents/real estate investors, and I am young and dumb and I doubt I would be able to find the best deal without connections. Instead of paying 1k (I live in Boston) in rent a month to a landlord, I figured I would rather build equity.

However, the only certainty is I do eventually need to move out. Is it worth it to buy a higher priced property and pay into a mortgage, than to rent and wait until I find a great deal?

I do not think I am experienced enough to buy a “tear down” house, so I was thinking going with a broker and getting something close to a “turnkey”.

• -Less than 20k of loans (very low interest rate)
• -18k cash, and ability to save more

My income is around 70k per year, and I think my max budget for a house would be around 350k (open to critique). Thus the areas I am looking at are Lynn/Lowell (open to suggestions). I would love advice from experienced investors and what their thoughts are with this plan. I am not looking to speak with real estate agents at this point. Thank you kindly. 

[Patrick Fraire]

I wouldn’t buy anything that won’t cash flow post house hack. Might as well rent unless you want to gamble on appreciation. When I look at house hack deals I make sure my negative cash flow is less than or equal too what I would be paying in rent. I also make sure it at least cash flow neutral post house hack.

Take with grain of salt. I am new to house hacking myself. That is just my criteria here in Southern California Market.