HUGE house hacker mistake...

[Ryan Davis]

When I bought my first duplex I planned to house hack. My mortgage payment was a supposed $906.59, and it was, for the first two months. Then I got an escrow statement in the mail. This letter made me aware that my mortgage was increasing $263 a month thus making my mortgage payment $1169.59. As you can imagine, I was shocked. After reviewing further, I realized that it was my property taxes that were increasing…after a few phone calls, I realize a made a big mistake. Let me explain,

The previous owner (a distant landlord) was previously paying $2300 a year in taxes. My mortgage officer knew I was going to live in one side so she estimated my taxes at 4% which would have only been about $900…Little did I know that if I were going to rent the other side out, I couldn’t legally claim 4% for the entire property. I now know that if you house hack, you have to file 6% property tax for half and 4% for the half you live in…duh…I should have caught this. Also, my property tax value has went up by $20,000. So now my payment is going up significantly and this greatly effects my cash flow.

I am renting the side I don’t live in currently for $800/month and once I move out, I will get the same for the other side. So, after vacancy, maintenance, and capex, I am not doing so hot in the cash flow as I thought I would.

So potential house hackers, learn from my mistake. As I write this, tears are flowing on my key board (not really, but almost). 

[Mike McCarthy]

You mention your tax value went up $20K. Do you agree with this reassessment? You can dispute it, all towns/cities have a process for handling it.

Something must have triggered it. Did you do any renovations?