My first multi-family house-hack

[Jordan Workman]

Hey everyone, I am a newbie and looking to do my very first multi-family house hack in Washington state. I know that it's more difficult to find cashflow here, but this is where we have decided to start. My question is: how important is it to have amazing cash flow on your very first property? I've ran the numbers on about 50 properties here, mostly duplexes, and found that its hard to find a scenario where we are living rent free on the opposite side. I'll most likely be paying a portion of the expenses. Is that ok, or will this slow me down when I go after more units later? Looking for some sound advice. Thanks!!

[Michael Haas]

@Jordan Workman nice work exercising your "deal analyzing muscle" - practice makes perfect, and being able to quickly vet the financials on these deals is an essential skill for any investor. 

It worth looking at the # of units in your assumptions - although getting a duplex and living for free on the other side isn't really possible in WA, getting a triplex or quadplex and living for free in one of the units sometimes is. A good way to think about this is looking at how much of the property you occupy, and therefore what % of the total rents will you be giving up in order to live there.

In a duplex this forgone rent is likely 50%, but in a quadplex its just 25%. You can take this to an extreme as well - what if you have a quadplex with 3 bed units, and you rent out three units and take two roomates with you for the unit you occupy? Now you're just forgoing 8% of the property's rental potential to live there!

The question then is is one of priorities - Is my priority to live for free, or to live comfortably? You should find the setup the feels right for you, and as long as the property cash-flows well if/when you move out and rent all the units you'll be fine.

Feel free to hit me up for a phone call or coffee anytime to chat more. We've got a couple meetups in the works in Seattle as well. What part of WA are you living / investing in?