House Hacking in Northern Virginia/Maryland Questions

[Juan Rodriguez]

Hello all, I am new to the world of real estate investing and would like to house hack to cover my mortgage. I've been doing a lot of research and I concluded on a particular plan.

I am looking at Woodbridge/Dumfries and Gaithersburg MD. My mortgage broker has pre approved me for 280k. I currently rent in Rockville MD and tried looking at investment/househacking opportunities in Rockville but everything was beyond my price range.

Last weekend I went with two agents to see properties in the area, primarily townhomes (3bed2+bath MUST have a basement where I would live), I didn't consider SFH because, again, out of the price range, also some didn't make sense on cash on cash.

So from my limited understanding you will find yourself with interested people wanting to rent if they live in the basement, and I've seen many ads in Woodbridge/Gaithersburg for people renting a basement in a townhouse. However, I wanted to take it a step further and have me living in the basement (I really do not need much more than this) and have them rent out the upper portion. I guess what I'm trying to do is to make a townhouse into sort of a duplex. Once I'm gone, I'd also rent the top part and the basement separately (only logistic issue we have so far are that the laundry/washer are located in the basement and I'd have to re-arrange them for the tenant upstairs but this isn't a problem) because this is the only way I'd actually make a return on my investment. I spoke to my realtors and they both seem to have "never seen" or "heard of" something like this, as if it's quite a strange idea, not the actual house hacking, but house hacking the basement while renting the above. 

My primary concern is how wide my net is when I cast it upon the waters of Woodbridge and Gaithersburg, am I going to find a family that's willing to live with some dude and his girlfriend in the basement? Although, consider we will be fully separated and never have to see each other unless they knock on our door.

An example with numbers:

Mortgage is 1500$
Rents out the whole place for 1700$
I live in the basement so I have to reduce that number a bit, again, I have asked my agents and they have no idea what to reduce that number to, the only thing I thought of was asking a property management company in the area and seeing if they had experience with this.
For the sake of the example, let's say they rent out the upper part for 1200 instead of 1700. Still a good deal, but my question is, why would they ever rent something like that over another similar house that doesn't have someone living downstairs (again - it would be completely separated with separate entrances as well - we would never see each other, but still). 

If it's a family, wouldn't they simply go elsewhere... what's the benefit of living in my house? I can make the rent cheaper and cheaper but at that point I'm losing money. Also, once I ultimately leave, my other question is, how much does the basement rent for? I have seen it be 800 a month in this area, but how true is this fantasy where I also have the upper part occupied meanwhile they have someone else living downstairs?

In the case that it is true, it's an amazing cash on cash, it's 1200 for upstairs, 800 for downstairs, 2000 in versus my mortgage of 1500, 500 profit a month. Down payment of 35k plus closing costs on a 260k is around 13% return.

This is the first time I'm doing any of this and I'd love it if the more experienced people would tell me how to find the answers to these problems, or if this is just too risky of an idea considering the potential vacancy. I appreciate the help, thank you deeply. 

[Sergio Toledo]

@Juan Rodriguez congratulations on your plan. It’s totally doable.

You can rent upstairs easily for $1500 assuming is a 3 bedroom an you have everything you need in the basement.

Also if you can rent upstairs by room and you would get much more since you can rent each room for at least $600 easily. There’s plenty of single people looking for rooms to rent that never cook and only get home to sleep and shower.