Non cashflowing on owner occupied 4 unit FHA

[Will Gleason]

Hi all,
I am looking at purchasing a quad in a really nice area of Minneapolis (will never have a problem finding people and rents/property value is always increasing).

Problem is based on the current rents if I moved in and moved someone out I would definitely be losing money ($650-$1200 depending on roommate or not) and the building is 100 years old so there will be general upkeep and expenses. 

Has anyone else negative cash flowed on a property for a period of time before it eventually turned around? I think once I move out I will clear maybe $400-$500 a month profit after increasing rents to the area standard. And property value I imagine will keep going up as well.

[Daniel Anshus]

@Will Gleason in the Minneapolis market you are almost never going to find something that cash flows  while you live in the property. The  point of house hacking is to lower your monthly expenses (have your mortgage payment less than your current rent) and get started in investing with a low down payment option. 

You should be saving 5-7% for both capex and maintenance minimum, on these older properties. Is maybe  clearing 4-500 a month actually profit after 10-14% for maintenance, capex, and at least 3% for vacancy? And most investors I speak with are looking for a minimum of $200 a door after all expenses. So, I would say $500 a month for a 4 plex isn't a good investment. But, if it is your first deal and it's a good building in a good area, it could be a great first step. The first property is the hardest but, once you get the first one done you will learn so much from it and will be thankful for it. 

Hard to tell you yes or no without seeing the property, your numbers, your goals etc. This is where you need to lean on your agent to make sure you are making a good decision.