Worcester, MA Rental Properties

[Spenser Hachey]

Hi All,

After crunching the numbers using a mortgage calculator, I'm having difficulty finding a property where I can cash flow from day 1. Let me break it down for you:

Boston prices are sky-high so I plan on house hacking a duplex in Worcester MA. I'm looking at a $300k- 400k price range but after running thr numbers, my mortgage would be more than the rent. For example, If I purchased a home for $350k and put 10% down (35k) over 30 years, my mortgage would be $1769 after taxes/PMI. After speaking to a local realtor I was told that a 2br unit in nice condition could get me anywhere from $1200-$1400. In other words, I wouldn't cash flow but the tenant would be helping me and I'd be paying less than my current rent.

What are your thoughts on buying a property where you're not cash flowing from day one?  Is it simply a bad idea? Should I buy a triplex instead so I can cover the mortgage?

I've read Set for Life, saved a good chunk of change and am ready to purchase my House Hack! But Is a duplex only worth buying if I can cashflow?

Thanks everybody for reading and looking forward to your advice/input.

-Spenser

[Phil K.]

Hi Spenser,

If you can lower your current rent by house hacking - you'd be saving yourself considerable expenses over time - all while owning a duplex. I think even though you aren't "cashflowing", you would still be saving because of the offset in your current rent (if you live towards Boston that is). 

If you can get yourself a 3 unit even better, or if you can find one a 4! The 4's are tough to come by but as an owner occupant the 3 other units would definitely enable you to potentially "cashflow".

The one thing I want to mention with the Worcester market - ensure that you have proper reserves. With most of the stock being older properties built ~1900 - if the property was not kept up with you'll run into a number of old things such as....knob and tube, lead paint, asbestos wrapped piping. All things over time you would potentially have to replace.

Good luck on your search and congrats on getting on the train!

 -Phil