First House Hack - Too good to be true?

[Sam Morgan]

Just wondering what people think about these numbers. Is this too good to be true? Am I missing something?

• Rents: $2,750
• Less Vacancy: $137
• Effective Rent: $2,612
• Taxes: $157.00
  Insurance: $85.00
  PMI: $213.00
  Maintenance: $137.50
  Cap X: $137.50
  Trash: $0.00
  Water & Sewer: $0.00
  Permits: $0.00
  Management $275.00
• NOI: $1,607
• Mortgage: $1,341
• Cash Flow: $265 (10.6%)

Year 2 Cash Flow: $622 (24.8%)

[Will Fraser]

Hi @Sam Morgan, this is not at all too good to be true!  This is the goodness of the house-hacking strategy.  The one area I see that might need to be tweaked on your numbers is the Insurance line item.  I’d recommend getting a specific quote from an insurance broker for the property you are looking at so that you aren’t surprised.

A 4-plex I own make a good example:  because of the combination of factors with it (age, flat roof, being a 4-plex) the insurance costs are 3x what any calculator predicts it should be (because most calculator tools use area averages based on the value of the home, instead of the actual home in all of its glory).