Small multi family house hack

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Small multi family house hack

Braeden Cook
WA · Member since 2018 · 10 posts · 1 vote

Hey everyone, had a couple quick questions about my plan. 

So I'm still in the learning and planning phase, but the plan is to house hack a small multi family for a year with an 3.5% FHA loan. As far as running the numbers on the multifamily, would you analyze with all the units rented or with you living in one? I assume you'd do both but obviously the numbers like cashflow per door and the CoC look much better with it fully rented.

We also have our primary residence, a SFH, that we would rent out for the year while house hacking. The numbers don't exactly look great on the house with the PITI of 1050 and the max rent would be about 1500, so using the 50% rule of thumb, likely to negative cash flow a couple hundred per month. I assume that would be acceptable for the year if it allows you to get a cash flowing mutlifamly? Just want to make sure I'm approaching this correctly.

Thanks in advance

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  • Curtis Rouse Jr
    Realtor · Atlanta, GA · Member since 2015 · 266 posts · 182 votes
    7y

    @Braeden Cook

    So you need to run the numbers with you living in one of the units to get a true picture of the financials. Ideally with house hacking the idea is to be living for free and best case scenario have a little cashflow on the back end. 

    With your SFR you might want to take a look at the Air BnB model that would give you substantially more monthly income to cover your 50% operating expenses budgeted. Look at the average daily rents in your area and use a rate factor of 66% for being occupied 20 days out of the month and go from there.

    Ultimately will come down to your long term goals and what kind of strategy you want to tackle over the long run. Like myself, you are along the right track with the multi family to start building wealth, but single family just isn't enough because the number of doors and the difficulty to scale.

    I hope this helps and Best of Luck!

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  • Braeden Cook
    OP
    WA · Member since 2018 · 10 posts · 1 vote
    7y

    @Curtis Rouse Jr thanks for the comment. I get what you’re saying about needing to run the numbers with us in one of the units, but that would only be for a year, so my thinking is even if we end up paying a small amount each month in “rent”, that unit would be almost all cashflow once rented out. But maybe that just isn’t a great deal and we should look for something with better cashflow. Granted this is all hypothetical at this point, but just trying to think through the possibilities. 

    The plan is to buy and hold for the long haul, but only to live there for a year. 

    As far as the SFH, unfortunately we aren't in a great destination area so it may not be viable. I would be more than willing if it made financial sense though. Thanks again and good luck to you in your RE journey

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