Duplex House Hack Cash Flow Question

[Dave McCulley]

I am looking to get out of my current SFH and into a duplex to house hack. I know cash flow is very important and getting the best deal is the most important thing.

If I break even of have to pay a little in mortgage by renting out one side and house hacking the other all while building equity in it, is this not a good idea since it's not cash flowing yet?  

I want to get into duplex owning, but as far as living in one, I don't want to be in a class C neighborhood and would have to pay more.  

Anyone have any expertise in this area?

[James Bradin]

I house hacked a duplex for 4 years, and am currently under contract on my second duplex that I intend to house hack for at least a year.  I'll provide my two cents:

I run all of my analysis as if the property were strictly an investment property, so run your numbers with the rent that you can expect right now.  I still try to stick to the 1% rule, and aim to cash flow at least $200 per door per month.  With the market as high as it is, this is getting more difficult (unless you find off market deals).  

With that in mind, right now is a great time to house hack.  I strive to purchase "recession proof" properties that have a rent between $900-$1400 a month (depends on your market).  Basically whatever "working class people" can afford right now, and what "young professionals" would want to rent should a recession happen.  It is always a great time to house hack.  Even if you knock off only a couple hundred dollars off your mortgage it will still most likely be less than you are currently paying for rent/mortgage right now by yourself.  I paid $200 a month in rent for 4 years, and this next duplex is going to cost me roughly the same, while most of my peers are paying $1500-$2000 a month in mortgage/rent.  You can do the math but it puts me well ahead of my colleagues and friends.  So even if your first deal is not a "home-run" it is hard to mess up house hacking.

There are a lot of tricks to analyze small multi-family units, and Brandon Turner has been hosting webinars pretty regularly on the process here on BP.  It is, in my opinion, the best way to get started in real estate investing.  It provides you the ability to save money quickly while learning the land lording process.  The BP book on Managing Rental Properties has basically served as my bible for the past few years, and I can promise that $20 book has paid for itself at least 1000 times over.

Let me know if you have any specific questions.