House Hacking Duplex vs. Triplex Affordability Hartford, Ct

[Michael Doherty]

Hi all,

I've been running a lot analysis reports from the rental calculator on BP and all my calculations show that I can never cash flow from a duplex (while house hacking). The average 3 BR Duplex is renting for about 600 per room for a total of 1800 per unit. My monthly expenses come in around 2300 per month. The only way for it to be a profit is if I didn't live there.

My question is: has anyone ever pulled the trigger on an investment property even though it initially didn't cash flow while living there? All the properties I've looked at would cash flow if I wasn't house hacking, however, I have no choice but to house hack.

My other question is: is it okay to go into an investment knowing you won't cash flow the first year, however, when you refinance and move out it will- so therefore you can justify the investment?

Thanks!

[Rick Santasiere]

@Michael DohertyGreat questions. House hacking is usually the best way to get your "feet wet" with investing, and there are so many people that did so (to live cheaper) and did not cash flow. The key would be running your numbers based on you NOT being there, but calculating all your typical BP Calculations. If you ask anyone who has done the MFR house hack, they will tell you to make sure you use cap ex, vacancy rate, and management fee (on top of all the other typical expenses) to run your numbers. NOT cash flowing while you living there is ok, as long as you run your numbers (as if you were a paying tenant). Let's face it; once you are there for a year and getting checks in your mailbox, you WILL do it again, and the place WILL cash flow without you there. My $.02